Qualcomm raises outlook; stock down on competition worries
By Noel Randewich
SAN FRANCISCO (Reuters) - Leading cellphone chipmaker Qualcomm forecast earnings below expectations on Wednesday as competition in the smartphone market intensifies, sending its stock sharply lower.
San Diego-based Qualcomm is benefiting from strong demand for smartphones and a shift by network operators worldwide to a high-speed wireless technology known as long-term evolution (LTE), where the chipmaker is ahead of rivals.
But the market potential is attracting growing competition from Nvidia, Broadcom, Mediatek and other chipmakers eager to expand their mobile market presence.
Qualcomm said it expects full-year revenue of $24.0 billion to $25 billion, up from its prior forecast of between $23.4 billion and $24.4 billion.
But investors focused on its full-year earnings per share forecast, which fell short of some expectations.
"You're seeing revenue upside but not the earnings upside you'd want to come with it," said Bernstein analyst Stacy Rasgon. "Whether it's because of competition or they're investing to stop competition, either way - it can lead to margin decline."
The company said it expects full-year earnings per share between $4.40 and $4.55. Analysts expected $4.54, according to Thomson Reuters I/B/E/S.
Qualcomm reported fiscal second-quarter revenue of $6.12 billion, an increase of 24 percent from a year ago. It said revenue in the current quarter would be between $5.8 billion and $6.3 billion. Continued...