Shares of Qualcomm rose almost 8 percent in early Nasdaq trading after the company said sales will be higher than expected. Revenue will hit at least $9.85 billion as demand for high-end handsets drives chip sales up from the company’s prior estimate of $9.8 billion.
The company lost $289 million in its second quarter, or 18 cents a share, after it agreed to pay Broadcom $891 million to settle a global patent dispute. The agreement will not change Qualcomm’s licensing revenue model for 3G or 4G technologies and will effectively end all litigation.
“We believe this reduces chipset hurdles for Qualcomm with customers such as Nokia… [and] continue to believe potential for reduced volatility from litigation should lead to multiple expansions,” said UBS analyst Maynard Um in a research note. Qualcomm will benefit from smartphone growth and should be able to expand profit margins on increased scale of production and a reduction in litigation expenses.
The company made $766 million, or 47 cents a share, in the same quarter last year. Sales fell 5.8 percent to $2.46 billion, but still beat analyst expectations of $2.35 billion. Sales of USB devices, inventory stabilization efforts and rising demand in China related to the country’s 3G deployment helped boost sales.
Filed Under: Infrastructure