Qualcomm's second fiscal quarter earnings beat expectations

Qualcomm's second fiscal quarter earnings far surpassed Wall Street expectations Wednesday as revenues climbed by 16 percent sequentially.

Qualcomm reported second quarter earnings of $999 million, or 59 cents a share (statement). Non-GAAP earnings were 86 cents a share on a revenue of $3.87 billion. Wall Street was expecting earnings of 80 cents a share on revenue of $3.62 billion.

CEO and chairman of Qualcomm, Dr. Paul E. Jacobs, said in a statement:

We are raising our revenue and earnings guidance for the year as the demand for smartphones across an array of geographies and tiers continues to grow. In addition, we have resolved the second of the two previously disclosed licensee disputes.  We continue to execute on our strategic priorities as our partners deploy our technologies and solutions to offer leading wireless products and services to consumers worldwide.

During the December quarter, Qualcomm shipped approximately 195 to 200 million units of CDMA-based devices, with each unit averaging between $200 to $206. Additionally, Qualcomm shipped approximately 118 million units of the CDMA-based Mobile Station Modem, up 27 percent.

Key points:

• Qualcomm is selling substantially all of its 700MHz spectrum for $1.9 billion
• FLO TV business and network were shut down on March 27, 2011
• Completion of the Atheros Communications "remains subject to the satisfaction of certain closing conditions" and should be completed by the end of the third fiscal quarter of 2011.

By the numbers:

• GAAP results for the second quarter of fiscal 2011 included an $0.18 loss per share for the QSI segment
• GAAP and Non-GAAP results included $401 million in revenues related to prior quarters and ongoing disputes, including a resolved dispute with Panasonic
• Return of capital to stockholders:  $316 million, or $0.19 per share
• Free cash flow:  $1.85 billion, up 125 percent year-to-year

Qualcomm's projected outlook for the third fiscal quarter called for non-GAAP earnings of $3.35 to $3.65 billion, or 68 to 72 cents a share. For 2011, Qualcomm's estimates have risen to expected non-GAAP earnings of $14.1 to $14.7 billion, or $3.05 to $3.13 cents a share.

For the fiscal third quarter, Wall Street is expecting earnings of 69 cents a share on revenue of $3.38 billion. For 2011, Wall Street is looking for non-GAAP earnings of $3.04 a share on revenue of $13.92 billion.

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