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Qualcomm Net Up 35 Percent Associated Press Qualcomm Inc.'s earnings rose 35 percent on continued sales growth in its fiscal fourth quarter, but the cell-phone technology company projected earnings for the new fiscal year below Wall Street's views. In a press release Wednesday, the San Diego-based company said it earned $393 million, or 23 cents a share, for the quarter ended Sept. 26, up from $291 million, or 18 cents a share, a year ago. Qualcomm said earlier this year that it would begin recognizing royalty revenue based solely on reports received from licensees, starting in the fourth quarter. In September, the company estimated that the switch would reduce fourth-quarter pretax earnings by about $298 million. Using the earlier method of estimating royalties, earnings were 29 cents a share in the latest quarter, excluding its venture capital unit. The results matched the average forecast of analysts polled by Thomson First Call. Fourth-quarter revenue rose 28 percent to $1.11 billion from $871 million a year ago. However, revenue fell 17 percent from the third quarter due to the change in royalty accounting. The company said significant royalties that would have been recognized in the latest quarter will now be recognized in the fiscal first quarter of 2005 when the actual royalty reports are received from licensees. Qualcomm's licensees reported selling 41 million cell phones that use code division multiple access, the technology Qualcomm invented, up from 23 million units in the same quarter a year earlier. For most of this year, the company said there has been insufficient inventory of its cell phones chips as demand continued to increase. The company now believes that demand and supply are in better balance, due in part to the recent temporary slowdown of the South Korean market. As a result, unit shipments in the fourth quarter were lower than its prior projection of 46 million units. Qualcomm expects fiscal first-quarter earnings of 24 cents to 26 cents a share, on revenue of about $1.3 billion to $1.4 billion, excluding the venture segment. The estimate assumes shipments of approximately 38 million to 39 million cell phone chips during the quarter, an increased tax rate and inclusion of three recently announced acquisitions. On a generally accepted accounting basis, the company expects earnings of 23 cents to 25 cents a share, on revenue of $1.3 billion to $1.4 billion. Wall Street has been projecting earnings of 31 cents a share for the December quarter, on revenue of $1.5 billion.
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