Qualcomm exceeds earnings estimates

(Telephony) Qualcomm topped analysts' earnings estimates by a penny yesterday, recording first-quarter fiscal year 2001 pro forma earnings of $0.29 per share, though losses because of charges related to mobile satellite operator Globalstar continue to drag earnings.

The CDMA chipset maker and patent holder recorded an actual loss of $228.7 million, or $0.31 per share, including $595 million in charges relating to Globalstar. Globalstar earlier this month announced plans to suspend indefinitely principal and interest payments on all its debt to give the carrier enough funds to operate through 2001. Globalstar did not make a principal and interest payment of about $22 million due to Qualcomm.

"We view both the debt and business restructuring necessary to the success of the Globalstar system," said Qualcomm Chairman and Chief Executive Officer Dr. Irwin Jacobs. "I believe Globalstar will operate for many years to come. Data services gives it an excellent opportunity to open new markets."

Qualcomm reported revenue of $684 million in the fiscal quarter ended Dec. 31., down from $764 million. Lower revenue was attributed to Qualcomm's fleet management Omnitracs division. The trucking industry has suffered from the slower economy and higher fuel costs, said Qualcomm management.

Qualcomm's stock, however, rose 6% by midday trading to $78.38, fueled by Qualcomm's report that the CDMA licensing business is growing rapidly. The company shipped 15 million chipsets during the quarter, exceeding estimates of 14 million chipsets. During the second fiscal quarter, Qualcomm said it expects to ship 16 million CDMA chipsets.

"Demand is higher than 16 million units, but a capacity limitation is limiting our shipments," said Richard Sulpizio, president and chief operating officer of Qualcomm. "We believe we'll resolve this to meet demand in the June quarter."

Qualcomm also said it was re-evaluating its decision to spin off its chipset business, which it had expected to do by the end of 2000, because of uncertainties surrounding the financial markets. Regardless of the IPO decision, Qualcomm said it is continuing to plan for the spin-off of the chipset division with full distribution of new shares by this fall.