Qualcomm Inc. stock jumped more than $35 last week after the Code Division Multiple Access technology innovator reported rising profits for the fiscal fourth quarter, which included a steady increase in royalty revenues.
Qualcomm’s shares rose $35.69 to $260.50 Wednesday. The company announced a four-for-one stock split on news that fiscal fourth-quarter net income, excluding charges, nearly tripled to $170 million, or 91 cents per share. Analysts were expecting about 88 cents per share.
Net income for fiscal 1999 reached $515 million, or $2.99 earnings per share, excluding a nonrecurring charge and operating results associated with the company’s infrastructure division it sold to L.M. Ericsson in May.
Revenues for the fourth quarter totaled $1.1 billion, an increase of 14 percent, compared with $926 million the previous year. Despite the sale of the company’s infrastructure division, revenues grew 18 percent to $3.9 billion in the fiscal year, compared with $3.3 billion in 1998.
Investors also got a glimpse of the benefits Qualcomm will receive when it sells its handset division-a money-losing division that is struggling with tighter margins and falling prices in the handset market.
Qualcomm’s earnings strength in its other divisions, primarily chipsets and royalty revenues, offset the nearly $40 million in earnings-before-taxes loss in the handset division.
Qualcomm Chairman and Chief Executive Officer Irwin Jacobs said the company has received several preliminary offers from other manufacturers interested in purchasing the division. He still expects to announce a buyer by the end of this year. Qualcomm’s goal, said Jacobs, is to find a strong strategic partner that can profitably compete in the handset business and be a strong buyer of Qualcomm’s chips.
Revenues in Qualcomm’s CDMA Technology division, formerly ASIC Products, reached $1.1 billion in revenues for the quarter, compared with $880 million the previous year. Earnings before taxes were $428 million.
As CDMA gained more acceptance worldwide, Qualcomm’s royalty revenues increased 57 percent, from $290 million in fourth quarter 1998 to $454 million, said the company. Earnings before taxes for the division reached $405 million for the quarter, with an 89-percent operating margin.
