Qualcomm raises forecasts amid handset growth

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Qualcomm, the number two maker of chips for mobile phones, on Tuesday raised second-quarter revenue and profit expectations – a sign it could be gaining ground on market leader Texas Instruments.

Qualcomm said it expected revenues of $2.1bn to $2.2bn, up from estimates of $2.0bn to $2.1bn for the quarter ending April 1, and earnings per share of 48 to 49 cents. Previously it expected 42 to 44 cents.

The San Diego-based company said its figures were based on the shipment of 60m to 61m Mobile Station Modem chips for phones, compared with its previous estimate of 55 to 57m units.

Qualcomm shares closed up 4.25 per cent in New York at $41.83. Texas Instrument shares fell 2.61 per cent at $31.74.

TI updated its first-quarter outlook on Monday by narrowing the range of its forecasts and trimming the top end. It predicted revenues of $3.07bn to $3.22bn, compared with the previous range of $3.01bn to $3.28bn. Profits per share of 29 to 33 cents were narrowed from earlier forecasts of 28 to 34 cents.

The numbers disappointed investors, but Merrill Lynch analysts said the news represented a buying opportunity ahead of an industry upturn.

Joe Osha, semiconductor analyst, predicted back-to-back sequential growth of 10 per cent or more over the next two quarters for TI.

He said concerns about possible market share losses would not be a factor this year. Nokia, TI’s main customer, has been looking to diversify its supplier base, but TI has been diversifying its customer base, most notably with Motorola.

Qualcomm has pioneered the CDMA mobile phone standard that has competed with the GSM standard in second-generation phones and is becoming dominant with 3G handsets. It said royalties being paid in its second quarter for CDMA licences suggested 91m CDMA phones shipped in the last quarter at an average selling price of $214, compared with estimates of 82m to 86m units at $217.

Paul Jacobs, chief executive, said Qualcomm’s estimates reflected strong growth in chipsets and handsets as operators deployed 3G WCDMA and CDMA2000 mobile broadband around the world.

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