Qualcomm's earnings outlook points to competition in Asia

Wed Apr 24, 2013 8:00pm EDT
 
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By Noel Randewich

SAN FRANCISCO (Reuters) - Leading mobile chipmaker Qualcomm forecast earnings below expectations on Wednesday as competition in smartphones intensifies and shifts toward Asia, and its stock fell sharply.

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 smaller rivals eager to expand their mobile presence in Asia and other developing regions.

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."

With investors concerned that Apple's growth may be slowing, shares of Qualcomm, which makes chips for the iPhone, have risen about 7 percent this year, less than the 13 percent increase in the Philadelphia Semiconductor index.

DOUBLE WHAMMY   Continued...

 
A man walks past a Qualcomm advertising logo at the Mobile World Congress at Barcelona, February 27, 2013. REUTERS/Albert Gea