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Booming 3G demand lifts Qualcomm

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3G networks might not be the money-spinner the carriers once hoped, but they're bringing increasing cheer to Qualcomm investors with each quarter. Qualcomm provides chipsets for its own flavor of 3G and receives a royalty on each W-CDMA phone sold, whether or not they include Qualcomm silicon. W-CDMA is the flavor of 3G favored by GSM carriers in Europe and Asia.

Yesterday the San Diego company reported a Q4 profit of $538m, up 40 per cent year-on-year.

Average selling prices have declined slightly from $212 to $206, but tis is offset by a growth in shipments of 3G phones: Qualcomm reckons it will sell 51 to 53 million in the current quarter, up from 40 million a year ago.

(That's more than twice as many iPods have been sold in the music player's entire history.)

Qualcomm sees 262 million CDMA units being shipped in calendar year 2006, with 86 million of those being W-CDMA

For the full year, Qualcomm recorded a profit of $2.14bn on sales of $5.67bn, up 25 per cent and 16 per cent respectively. Qualcomm spent $1bn on R&D in the full year, up 40 per cent.

Executives said the company is looking at revenue of $6.7bn to $7.1bn for FY 2006.

Six rivals and partners last week filed a complaint with the EU about Qualcomm's W-CDMA royalty rates depressing the share price to $40. Panasonic and NEC are joining Qualcomm's historical adversaries - Nokia, Texas Instruments, Broadcom and Ericsson - in the action.

As we reported on Monday, Qualcomm may be quietly watching the WiMAX bandwagon from the sidelines, but it's also a kingmaker for 4G. ®

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