Qualcomm: Q4 strong, outlook stronger

Qualcomm reported a better-than-expected fourth quarter as its chipsets sold well as new mobile devices such as the iPhone 5 launched.

The company reported fourth quarter earnings of $1.27 billion, or 73 cents a share, on revenue of $4.87 billion, up 18 percent from a year ago. Non-GAAP fourth quarter earnings were 89 cents a share.

Wall Street was expecting Qualcomm to report fourth quarter earnings of 82 cents a share on revenue of $4.66 billion.

For fiscal 2012, Qualcomm reported earnings of $6.11 billion, or $3.51 a share, on revenue of $19.12 billion, up 28 percent from a year ago.

However, Qualcomm's outlook is what will garner some attention. The company projected first quarter revenue of $5.6 billion to $6.1 billion. Wall Street is looking for first quarter revenue of $5.3 billion. Qualcomm said that non-GAAP earnings for the first quarter will be $1.08 a share to $1.16 a share. Wall Street was expecting first quarter earnings of $1 a share.

The company's fourth quarter results highlight the difference between the fast-growing mobile market and the mature PC business. Intel, the top dog in semiconductors, is struggling to keep growth rates going while ARM-based rivals like Qualcomm shine. 

Qualcomm is projecting strong chip shipments for the first quarter. Qualcomm CEO Paul Jacobs said that the company will deliver double digit revenue growth for fiscal 2013. The company also projected that it will see more than 1 billion to 1.07 billion 3G/4G device shipments.

Jacobs said on an earnings conference call:

Turning to calendar 2013, despite a somewhat cautious macroeconomic outlook, we expect 3G/4G device shipments to grow approximately 14% year-over-year based on the midpoint of our forecast. We believe our long-term growth drivers remain intact. Smartphone adoption continues at a rapid pace with many increasingly capable devices at a variety of price points being launched on a global basis.

Here Qualcomm's outlook:

Qualcomm operating chief Steve Mollenkopf said the company stands to gain due to its LTE chipsets. He added:

We believe our first 28 nanometer Snapdragon product, the dual-core MSM8960 with integrated 3G/LTE has become the global standard for combined performance and battery life, powering recent flagship devices such as the Samsung Galaxy S 3, the HTC 8X, the Motorola Razr M, and the new Nokia Lumia phones. As carriers deploy LTE networks they're looking to Qualcomm is the leader in multimode LTE for smartphones. For example, KDI, NTT DoCoMo and SoftBank announced 27 new smartphones in Japan in October, and 24 of those were powered by Qualcomm Snapdragon processors. 

Since releasing the MSM8960, 15 OEMs have launched devices with this chipset across 19 carriers around the globe. The 8960 was our fastest integrated product to ship 100 million units.

By the numbers:

• Licensing revenue for the fourth quarter was $1.66 billion, up from $1.44 billion a year ago. Equipment and services revenue in the fourth quarter was $3.21 billion, up from $2.67 billion a year ago.
• Qualcomm shipped 141 million chips in the fourth quarter.
• The company saw 846 million to 863 million device shipments with an average selling price of $216 to $222 per unit.
• Qualcomm had $26.8 billion in cash and equivalents.
• Research and development spending was $1.11 billion in the fourth quarter. For fiscal 2012, Qualcomm spent $3.91 billion in R&D.