Qualcomm Inc. and Texas Instruments Inc., which dominate chip manufacturing for CDMA and GSM network and handset technologies, respectively, posted strong quarterly earnings for their latest fiscal quarters.
For Qualcomm’s second fiscal quarter, which ended March 26, the San Diego-based company reported net income of $593 million, an 11-percent increase over the year-ago quarter, on revenues of $1.83 billion.
The vendor attributed its earnings growth to demand for its chipsets in both CDMA2000 1x EV-DO and W-CDMA/HSDPA technologies, which serve the so-called 3.5G networks being built in mature wireless markets, as well as demand for lower-tier chipsets for CDMA2000 in emerging markets. Demand for Qualcomm’s W-CDMA/HSDPA chipsets was particularly strong in Europe, the vendor said.
“This broad demand is testimony to the fact that CDMA-based networks enable advanced data capabilities for developed markets as well as effectively serving more voice-centric developing markets,” said Paul Jacobs, chief executive officer of Qualcomm. “I am optimistic,” he added, “about the market acceptance of new and future products including [EV-] DO Revision A and B, HSDPA, HSUPA, MediaFLO, single-chip solutions and uiOne for customizing the user interface on a wireless handset.”
As a result of its own positive outlook for the year, Qualcomm raised its forecast for W-CDMA handset sales this year to 96 million units from 86 million units, while also upgrading its view of CDMA handset shipments to 283 million units from its earlier forecast of 262 million units. W-CDMA is used in networks and handsets in Europe, while CDMA is the dominant technology in the United States. With these raised forecasts for handset sales, the vendor also raised its revenue projections for 2006 to a range of $7.1 billion to $7.4 billion, up from earlier estimates of $6.7 billion to $7.1 billion.
These results were roughly in line with analysts’ expectations. Both Qualcomm and Texas Instruments’ stock value has risen sharply in the past year -about 58 percent and 44 percent, respectively-as Wall Street has recognized that demand for 3G networks and handsets will drive growth in the two companies’ semiconductor businesses.
Texas Instruments also posted strong results. The Dallas-based semiconductor vendor reported first-quarter net income of $585 million on $3.33 billion in revenue, a 42-percent improvement over the $411 million it reported in the year-ago quarter on $2.7 billion in revenue. The profit driver was strong demand among TI’s wireless customers; the vendor makes chipsets primarily for GSM technologies such as 3G handsets in developed markets, entry-level handsets in emerging markets and wireless base stations. The company also credited high consumer interest in its DLP picture technology for high-definition television sets.
TI also projected strong growth for the current quarter, including higher profit and revenue levels than anticipated by analysts. The company forecast that overall revenue for the second quarter would rise to between a range of $3.46 billion and $3.75 billion, the bulk of which is accounted for by its semiconductor business. The value of Texas Instruments’ shares subsequently rose in after-hours trading.
