SAN DIEGO—Qualcomm Inc. reported increases in both revenues and earnings for its fourth quarter and full year, but the company warned that it is “not optimistic” that its licensing negotiations with Nokia Corp. will conclude when the companies’ current deal expires in April.
Qualcomm earlier this year announced its licensing deal with Nokia, the world’s largest handset maker, expires in April, and that the two companies would have to negotiate a new licensing agreement. Such agreements are often critical to technology companies that make millions off patent-licensing contracts.
“Although we regularly meet with Nokia to discuss the terms of such an extension, given, among other things, Nokia’s recent public statements and the little progress we have made to date, our negotiating team is not optimistic that we will conclude the extension by April 2007,” said Qualcomm President Steven Altman in a conference call with analysts transcribed by SeekingAlpha.com.
Qualcomm executives also addressed concerns about some CDMA carriers across the globe planning to switch to GSM technology.
“I would also like to comment on recent speculation concerning the health of the CDMA2000 market based on a small number of emerging market operators considering GSM overlays to their CDMA2000 network,” said Qualcomm chief Paul Jacobs. “CDMA2000 continues to pace the migration from 2G to 3G and strengthens its market position. Close to 80 percent of the entire 3G subscriber base uses CDMA2000 devices and services. According to the CDMA Development Group, nearly 200 CDMA2000 networks are in operation worldwide as compared to 127 at this point last year.”
Jacobs did not comment further on the issue.
As for Qualcomm’s financials, the company posted revenues for the fourth quarter of $2 billion, up 28 percent from revenues of $1.56 billion the company reported during the same quarter last year. Revenues for the year were $7.53 billion, up 33 percent from revenues of $5.67 billion last year. The company’s revenues beat analysts’ estimates of $1.97 billion for the quarter and $7.49 billion for the year.
Qualcomm’s net income for the quarter was $614 million, a 14-percent increase from net income of $538 million during the same period last year, but down 5 percent from last quarter. Net income for the year was up 15 percent to $2.47 billion compared with net income of $2.14 billion last year.
“We shipped a record 207 million MSM chips in fiscal 2006—up from 151 million in fiscal 2005,” said Jacobs. “As of September 2006, there were approximately 402 million subscribers using third-generation, CDMA-based networks worldwide as compared to approximately 273 million at the same point in 2005.”
The company said it expects to report revenues of between $1.98 billion and $2.08 billion during its first fiscal quarter of 2007.
Wall Street appeared relatively satisfied with Qualcomm’s earnings. The company’s stock remained largely unchanged on the news at about $36.37 per share.
