Global 3G boost for Qualcomm
Nextel falls into line
The global roll-out of 3G networks continues to boost Qualcomm's bottom line. The San Diego company closed its first quarter of fiscal year 2005 with a net income of $513m on earnings of $1.39bn.
Qualcomm reckons that the next year will see 55 million 3G phones ship, each one bearing a royalty gift back to San Diego, alongside 168 million CDMA phones. WCDMA 3G accounted for 32 per cent of royalties in the most recent quarter, up from 12 per cent a year ago. Royalties account for $412m, or just about a third of Qualcomm's gross revenues. CEO Irwin Jacobs sounded bullish on the prospect of the recent mega-mergers at home. He told the FT that Cingular's 3G investments would prompt Verizon to speed up, but Qualcomm's best news was delivered on a plate when Nextel, Motorola's biggest single customer, announced it was to merge with Sprint.
Although year on year quarterly profits were up 46 per cent, shares fell after Qualcomm said its next quarter would gross between $1.35 and $1.45. Wall Street analysts had expected to see something closer to $1.49. Long-term investors won't be grumbling too much.
A court ruled this week that a Sunnyvale company, Maxim Integrated Products, had clearly violated its patents but decided that Qualcomm hadn't suffered damages as a result. Maxim had countersued Qualcomm on antitrust grounds, and claimed this week that it can still bring its chipsets to market. The Judge sent both legal teams away to agree on a settlement. ®
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