SAN FRANCISCOWireless chip vendor Qualcomm Inc. Thursday (March 25) lifted its sales and profit targets for the quarter ending March 28, citing strength in licensing revenue and favorable volume and product mix in its chipset business.
Qualcomm (San Diego) said it expects sales for the quarter to be between $2.55 billion and $2.65 billion, up from the previously guided range of $2.4 billion to $2.6 billion. The company said it now expects diluted earnings to be 56 to 58 cents per share on a pro forma basis, up from the previous estimate of 49 to 53 cents per share.
Qualcomm also said it now expects mobile station modem shipments for the quarter to be about 92 million to 93 million units, up from prior guidance of 88 million to 92 million.
Craig Berger, an analyst with FBR Capital Markets, said evidence supporting improving near-term results from
Qualcomm has been mounting. Berger cited decreased inventory spending by global handset OEMs in the fourth quarter of last year, an increase in rolling forecasts from handset OEMs following robust sales over the Chinese New Year and manufacturing contacts that indicated Qualcomm was seeing near-term order strength.
"We believe the majority of Qualcomm's [earnings per share] upside is not due to better revenues, but rather better operating expenses and, potentially, better interest income," Berger wrote in a report circulated Thursday. He said FBR is now expecting Qualcomm's operating expenses to grow 5 percent sequentially, down from the firm's previous estimate of 8 percent.
FBR maintains a rating of "outperform" on Qualcomm's stock. The firm raised its price target for Qualcomm shares to $50 from $48. Qualcomm shares traded at $42.23 in afternoon trading Thursday, up 5 percent from Wednesday's close.
Paul McWilliams, editor of investor news service Next Inning Technology Research, said in a note to subscribers that he thought Qualcomm had taken a very conservative posture with its original guidance for the quarter.