News
Issue #2003 - 26 (October 2003)
(Updated Oct. 1, 2003)

MARKET OUTLOOK

Financial News from Wireless Companies

QUALCOMM Updates Financial Guidance for Fiscal 2003 & Palm Stops Bleeding

SAN DIEGO, Sept. 16 /PRNewswire-FirstCall/ -- QUALCOMM Incorporated (Nasdaq: QCOM) today updated its financial guidance for its fourth fiscal quarter ending September 28, 2003.

Fourth Quarter and Fiscal 2003
On July 23, 2003, we estimated fourth fiscal quarter revenues excluding the QSI segment to increase approximately 2-6 percent year-over-year. We had anticipated fourth fiscal quarter earnings per share to be $0.27-$0.29. For fiscal 2003, we had anticipated revenues to increase 31-33 percent year-over-year and earnings per share of $1.40-$1.42, up 43-45 percent year-over-year. These estimates were based on the shipment of approximately 19-21 million MSM phone chips in the fourth fiscal quarter.

Based on the current business outlook, we now anticipate that revenue and earnings per share for the fourth fiscal quarter and fiscal 2003 will achieve the high end of our prior guidance. We now expect to ship approximately 20 million MSM phone chips in the fourth fiscal quarter. Royalty reports from our licensees, received in this September quarter for CDMA products sold in the quarter ended June 30, 2003, indicate sales of approximately 23 million new CDMA subscriber units compared to our estimate of 25 million units for that quarter. The average reported price of new CDMA subscriber units increased sequentially in the June quarter.

"We're approaching the end of a strong growth year for CDMA and QUALCOMM," said Dr. Irwin Jacobs, chairman and CEO of QUALCOMM. "Steady progress in the deployment and use of 3G CDMA networks is continuing around the world. Customer demand for our MSM phone chips to support these networks leads us to expect a sequential increase in the number of MSM phone chips shipped in the
coming December quarter."

On July 23, 2003, we estimated total QUALCOMM revenues for the fourth fiscal quarter to increase 2-6 percent year-over-year and total QUALCOMM earnings per share of $0.19-$0.21, including an estimated $0.08 loss per share attributed to the QSI segment, compared to $0.23 per share in the year ago quarter. For fiscal 2003, total QUALCOMM revenues were anticipated to increase 30-31 percent year-over-year with total QUALCOMM earnings per share in the range of $0.84-$0.86, up 91-95 percent year-over-year, including an estimated $0.56 loss per share attributed to the QSI segment. Based on the current business outlook, we now expect total revenues and total earnings will achieve the high end of our prior guidance. Due to their nature, certain income and expense items such as realized gains or losses, gains or losses on derivatives, income related to the use of our FCC Auction Discount Voucher and asset impairments cannot be accurately forecast. Accordingly, the Company excludes such items from its business outlook, and actual results may vary materially from the business outlook if the Company incurs any such income or expense items.

2. Palm Reduces Losses and Report Modest Revenue Growth
Palm, in September, reported a smaller first quarter net loss and posted its first year-over-year revenue growth in five quarters. Palm reported a net loss of $21.7 million, or 74 cents a share, compared with a net loss of $258.7 million, or $8.93 a share, in the same quarter a year earlier. Excluding restructuring charges and amortization, Palm reported a loss of $16.9 million, or 58 cents a share, beating estimates of a loss of 83 cents a share. Palm said quarterly revenue grew to $177.4 million, up from $172.3 million a year ago. These results are the last Palm will report before it spins off its software division and completes a merger with smart phone maker Handspring.

Source: FierceWireless & Qualcomm Press Release

MobileInfo Comments and Advisory: Qualcomm's financial results do offer a positive outlook at the chip level and theoretically also for handset manufacturers. If the supply chain does not get clogged at service provider level, it should translate to revenue growth for carriers also, though next next year.

In another sector, Palm has stopped bleeding. However the real question is - will it grow to become healthy again? Market will determine that, not our crystal ball. 

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