Communications chip maker Qualcomm Inc. said Wednesday that profit for its fiscal fourth quarter rose 35% thanks to the continuing popularity of mobile phones in the U.S. and abroad, particularly those with color screens and built-in cameras.
San Diego-based Qualcomm reported net income of $393 million, or 23 cents a share, in the three months ended Sept. 26, compared with $291 million, or 18 cents, a year ago. Revenue rose 28% to $1.1 billion.
For the full fiscal year, Qualcomm earned $1.7 billion, or $1.03 a share, more than twice its profit of $827 million, or 51 cents a share, in fiscal 2003. Revenue for the year was $4.9 billion, a gain of 27%.
The company's forecasts for 2005 were below Wall Street's expectations. For the first quarter, Qualcomm said it would have a profit of 23 cents to 25 cents a share, significantly less than the 31-cent consensus of analysts surveyed by Thomson First Call.
For the full year, Qualcomm said it anticipated a profit of $1.12 to $1.16, slightly below the $1.21 forecast by analysts.
Chief Financial Officer William Keitel attributed the numbers to declining demand for mobile phones in South Korea and a buildup of inventory elsewhere.
That sent shares falling to $37.85 in after-hours trading. They had dropped $1.01 to $39.87 in regular Nasdaq trading before the earnings were released.
"What we're seeing ... is slowing adoption of features that made people want to upgrade their handsets," said Michael Cohen, an analyst with Pacific American Securities in Fremont, Calif.
Qualcomm's technology for wireless phones, known as CDMA, is used in the U.S. and a handful of other countries. But most countries are expected to adopt wideband CDMA -- or build networks compatible with the technology -- in the coming years. That will bring broadband speeds to mobile phones.
"In the long term I'm still very optimistic about the ramp to wideband CDMA, which gives Qualcomm another big opportunity for growth," Cohen said.
Sanjay Jha, who heads Qualcomm's CDMA Technologies Group, told analysts during a conference call that he expected wideband CDMA to be a significant portion of revenue a year from now.
"As ours and other handsets come to market and prices come down, volume will grow and Christmas next year will be very important," he said.