Qualcomm's CEO Says Company Is 'Executing Well'

LOS ANGELES -(Dow Jones)- Qualcomm Inc.'s chief executive, Paul Jacobs, said the company is "executing well," even as it reiterated guidance for 2006 which disappointed Wall Street.

"We are executing well and we continue to be excited," Jacobs said Wednesday during a conference call.

For fiscal 2006, Qualcomm reaffirmed its expectation for pro forma earnings of $1.43 to $1.47 a share. The company also continues to expect full-year earnings prepared under Generally Accepted Accounting Principles of $1.19 to $1.23 a share.

Analysts, on average, are looking for fiscal 2006 earnings of $1.49 a share, excluding items.

Average selling prices for cell phones are expected to decline over the course of the year as more cheap phones are sold in lower-income countries.

At the same time, the company expects to increase investments in research and development this year, putting further pressure on earnings.

"Prices for handsets and devices continue to decrease as we continue to invest in R&D to drive this dynamic," Jacobs said.

Qualcomm makes cellphone chips, but earns more of its profit from licensing its patents to other firms.

The company's fiscal first-quarter earnings increased almost 21% as the company saw year-over-year growth in demand for its chips. The company also reaffirmed its fiscal 2006 earnings and revenue outlooks.

Qualcomm said for the quarter ended Dec. 25, earnings increased to $620 million, or 36 cents a share, up from $513 million, or 30 cents a share in the year-earlier quarter.

Excluding one-time items and results from its investments, Qualcomm said it earned $667 million, or 39 cents a share, up from $543 million, or 32 cents a share.

The company was expected to earn 38 cents a share on revenue of $1.75 billion, according to the consensus of analysts surveyed by Thomson First Call.

Qualcomm is looking to the rollout of its key cellphone technology CDMA in developing nations such as India and China for a major part of its growth.

The company also said new cellphone features from companies using CDMA standards will help to drive growth in Qualcomm's revenue.

For instance, Verizon Wireless is making "great strides" in developing its service for real-time mobile video.

-By Andrew Simons, Dow Jones Newswires; 323-658-3874

(END) Dow Jones Newswires"

Posted to the site on 26th January 2006