Qualcomm raises phone-chip sales forecast

Wireless technology firm notes high Asian demand

March 11, 2003|By BLOOMBERG NEWS

SAN DIEGO - Qualcomm Inc., whose mobile telephone technology is used by 135 million people, said yesterday that it will sell 1 million more phone chips in its fiscal second quarter than the company had forecast, because demand in Asia is rising.

Qualcomm plans to ship about 28 million phone chips in the three-month period that ends March 30, after estimating 27 million, the company said. Qualcomm shipped 14 million chips in the year-earlier quarter.

Companies such as India's Reliance Infocomm Ltd. are starting new phone networks, boosting demand in Asia for Qualcomm chips. Qualcomm expects 7 million subscribers from Reliance this year and improvement from China Unicom Ltd., which had 7 million users last month. The higher orders raise some concerns about whether sales will slump later in the year, investors said.

"Most investors, including myself, want to see the subscriber growth in the Reliance network and growth in China," said Jeff Osborne, an analyst at Munder Capital Management, which oversees $29.8 billion and owns 835,699 Qualcomm shares. "There are a lot of question marks for the second half of the year, and whether it's going to be a lopsided year."

The company's first-quarter sales surged 57 percent to $1.1 billion as demand soared in Asia for handsets that let users take photos, browse the Internet and play games.

In January, Qualcomm raised forecasts for fiscal 2003 profit and sales, pointing to growth in countries including China and India.

Third-quarter shipments will rise to as many as 25 million chips, up 56 percent from 16 million a year earlier, Qualcomm said.

Chief Financial Officer William Keitel said last month that 87 percent of China's mobile-phone market is "still to be captured" by Qualcomm. China is the largest wireless-phone market, with 207 million subscribers.

Reliance's network in India, the world's second-most populous nation, covers 65 percent of India's population, Keitel said.

Qualcomm, which developed the code-division multiple access, or CDMA, technology for mobile phones, plans to release fiscal second-quarter results April 23.

Qualcomm's shares slid 94 cents to close at $34.24 on the Nasdaq stock market.

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