Qualcomm 4Q Net Up 37%; Co Gives 1Q, FY06 Views"

SAN DIEGO -(Dow Jones)- Qualcomm Inc.'s fourth-quarter earnings rose 37%, fueled by demand for next-generation cell phones.

The company also sees first-quarter results beating analysts' expectations and it provided guidance for fiscal 2006 that is roughly in line with Wall Street estimates.

Additionally for fiscal 2006, Qualcomm expects royalty revenue to add to revenue and pretax earnings, but sees certain items cutting into earnings per share.

In a press release Wednesday, the wireless-technology giant said its earnings for the fourth quarter ended Sept. 26 increased to $538 million, or 32 cents a share, from $393 million, or 23 cents a share, a year earlier. In July, Qualcomm said it expected earnings of 28 cents to 30 cents a share.

Excluding results from its Qualcomm Strategic Initiatives segment, fourth-quarter earnings increased to $543 million, or 32 cents a share. This was in line with September guidance for operating earnings estimate to 32 cents to 33 cents a share.

Total Qualcomm results for the current fourth quarter included breakeven for the QSI segment.

Analysts, on average, expected the company to earn 33 cents a share, before items, and post revenue of $1.54 billion.

Operating revenue for the quarter rose 14% to $1.56 billion, which was roughly in line with Qualcomm's raised guidance of $1.48 billion to $1.58 billion.

Fourth-quarter GAAP revenue rose 40% to $1.56 billion from $1.12 billion.

The company also exceeded its own full-year 2005 operating earnings and revenue expectations, which topped Wall Street projections.

In after-hours trading, shares of Qualcomm changed hands recently at $41.49, up from Wednesday's close of $40.38.

Qualcomm expects first-quarter operating earnings of 36 cents to 38 cents a share, which is above Wall Street's average estimate of 35 cents a share. A year earlier, operating earnings were 28 cents a share.

On a GAAP basis, which includes charges of 2 cents a share related to the QSI segment and 4 cents a share for share-based compensation, the company expects earnings for the quarter of 30 cents to 32 cents a share.

Qualcomm also expects first-quarter revenue of $1.67 billion-$1.77 billion, up from year-ago operating and total revenue of $1.39 billion.

Analysts, on average, are looking for revenue of $1.66 billion.

Additionally for the first quarter, the company expects to ship 46 million to 48 million mobile station modems, or MSM, phone chips and 51 million to 53 million CDMA and WCDMA units, at an average selling price of $206.

In the year-ago quarter, Qualcomm shipped 39 million MSM phone chips; and 40 million CDMA and WCDMA units, at an average selling price of $212.

Qualcomm makes most of its money by licensing the wireless transmission standard it developed called CDMA, or code division multiple access, that is widely used in the U.S. and Asia. The company also sells chips based on that technology, and collects patent royalties for handsets that use a technology called WCDMA, or wideband CDMA, that is being rolled out in Europe.

For fiscal 2006, Qualcomm expects operating earnings of $1.43 to $1.47 a share, which brackets Wall Street's average estimate of $1.45 a share. In 2005, operating earnings were $1.16 a share.

On a GAAP basis, which includes charges of 6 cents a share related to the QSI segment and 18 cents a share for share-based compensation, the company expects earnings for the quarter of $1.19 to $1.23 a share. In 2005, GAAP earnings were $1.26 a share.

Qualcomm said its fiscal 2006 per-share earnings include a decrease of 18 cents a share for total Qualcomm related to a preliminary estimate of share-based compensation expense, and a decrease of 3 cents a share from the completed Elata acquisition and the anticipated Flarion acquisition.

The company also said it expects the termination of two royalty-sharing agreements to add about $290 million to $310 million to fiscal 2006 and pretax earnings.

Qualcomm expects fiscal 2006 revenue of $6.7 billion to $7.18 billion, up from 2005 revenue of $5.67 billion.

Analysts, on average, are looking for revenue of $6.9 billion.

Additionally, Qualcomm expects its fiscal 2006 CDMA/WCDMA handset unit average selling price to be $210.

For calendar 2006, the company expects to ship 176 million CDMA units and 86 million WCDMA units.

Qualcomm Chief Executive Paul E. Jacobs said in Wednesday's press release that the company's record financial results "reflect the accelerating migration of CDMA throughout the world."

As of September, the company said there were about 159 operators offering third-generation services in 71 countries with more than 200 million subscribers.

Jacobs said Qualcomm's WCDMA/HSDPA systems were selected by more than 30 handset manufacturers around the world, and added that the company plans to release several wireless devices based on its chipsets by the end of this year.

At the end of its fiscal year on Sept. 26, Qualcomm had $8.7 billion in cash, cash equivalents and marketable securities, up from $7.9 billion at June 26 and $7.6 billion on Sept. 26, 2004.

The company's strong quarterly and full-year results and upbeat outlook for the first quarter and fiscal 2006 follows on the heels of a complaint filed with European regulators recently by some of its rivals.

Late last week, six telecommunications companies accused Qualcomm of breaking antitrust law in its licensing of mobile phone patents, and said the company was charging excessive royalties for its W-CDMA mobile-phone technology.

Broadcom Corp., LM Ericsson Telephone Co., NEC Corp., Nokia Corp., Panasonic Mobile Communications and Texas Instruments Inc. each filed complaints to the European Commission, requesting the agency investigate Qualcomm's alleged violation of antitrust laws.

Qualcomm has rejected the allegations as "factually inaccurate and legally meritless."

Company Web site: http://www.qualcomm.com

-Karen M. Lee; Dow Jones Newswires; 201-938-5400; Asknewswires@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 3rd November 2005