Shares of Qualcomm Inc, the biggest maker of chips that run smartphones, surged in late trading on Wednesday after giving a strong sales forecast for this quarter, bolstered by its expansion into new markets.
Revenue would reach US$10.5 billion to US$11.3 billion in the fiscal third quarter, Qualcomm said on Wednesday. That compares with analysts’ average estimate of US$9.97 billion. Profit would be US$2.75 to US$2.95 a share, well above the US$2.60 average projection.
Qualcomm’s main product is the processor that runs many of the world’s smartphones, and another of its chips connects Apple Inc’s iPhone to high-speed data networks. That makes it particularly vulnerable to swings in demand for such devices.
Photo: Reuters
However, under chief executive officer Cristiano Amon, the company is trying to parlay that skill set into a growing presence in vehicles, networking and computers.
“We can no longer be defined just as a communications company serving just one industry,” he said on a call with analysts.
Qualcomm shares rose as much as 7.3 percent in extended trading following the announcement. They closed at US$135.10 in New York trading on Wednesday.
Analysts have pointed to slowing demand for Android phones in China, the largest market, as a threat to growth, but sales of Qualcomm’s phone-related chips were higher than expected last quarter. They came in at US$6.33 billion, compared with an estimate of US$5.99 billion.
The company predicted its handset division would grow more than 50 percent this fiscal year, bolstered by Samsung Electronics Co’s flagship Galaxy phone and gains at some Chinese smartphone makers.
Executives said that there is some evidence of weakness in demand for cheaper phones, but it would not hurt Qualcomm’s revenue because that is not a big part of its business.
Revenue from the Internet of Things — efforts to add computing power to a wider range of devices and appliances — was US$1.7 billion. That compared with an average projection of US$1.6 billion.
Increasing use of its chips in industrial machinery is driving growth as well, Qualcomm said. The company’s automotive unit, which posted sales of US$339 million, was up 41 percent from a year earlier.
It has a “design-win pipeline” that would amount to more than US$16 billion of sales, Qualcomm said.
Excluding certain items, profit in the fiscal second quarter was US$3.21 a share, compared with analysts’ average estimate of US$2.93.
The company generated US$11.2 billion in revenue, topping the US$10.6 billion projection.
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