Qualcomm stops whingeing, reaps WCDMA goldmine
WCDMA, the rival flavor of 3G that Qualcomm has for so long disparaged, helped the company to bumper profits in the last quarter.
Before tax, Qualcomm grossed a profit of $668m on revenue of $1.34bn in the third quarter of fiscal year 2004. That's a net income ten per cent higher than the preceding quarter, and 71 per cent higher than the corresponding quarter of the previous year. Revenues were up fifty per cent over the same period in the last fiscal year.
And this is on top of higher R&D costs: Qualcomm continues to invest in its own CDMA 2000 3G family, the hybrid GSM/CDMA GSM1x chipsets and WCDMA. Qualcomm thanked the latter - the flavor of 3G adopted in Europe and Japan, which for five years it has dissed in a high profile public relations campaign. As a result of the 1999 agreement, WCDMA 3G (UMTS) nets Qualcomm royalties without the company doing anything - and that amounted to 25 per cent of the company's licensing revenues in the last quarter.
But instead of muttering darkly about government protectionism locking it out of the infrastructure business, it's decided it can beat them by joining them, without compromising its own CDMA 2000 3G. And the company's more pragmatic focus has seen its investment in WCDMA hardware pay off. Qualcomm says it has 21 customers for its WCDMA chipsets, higher than it expected, and expects this to provide future growth.
The San Diego company rewarded shareholders with a two-for-one stock split and said its cash pile had risen to $7bn.
Qualcomm faces stiff competition in its bread and butter CMDA chipset business, with LG stating that it would opt for EV-DV chipsets from "a foreign maker" in its IMT-2000 trial. However, Qualcomm claims to be ready for the next major high-speed upgrade to 3G, HSDPA (High Speed Downlink Packet Access), sometimes called "3.5G". This promises to double capacity and boost download speeds by a factor of five, and carriers are betting on it to preserve their investments in the face of WiMAX.®
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