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Global 3G boost for Qualcomm

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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.

R&D increased sharply to $228m. Qualcomm has snapped up a UI company Trigenix and a next generation display company Iridigm in recent months.

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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