Shares of QUALCOMM rose 2.5% to $43.50 in extended trading Wednesday (after falling 1.5% during normal trading), following an adjusted Q3 EPS beat of $0.55 vs. $0.51, and upward revised current quarter revenue guidance of $2.15b-2.25b (+8% to +13% over prior estimates), with EPS between $0.48-0.50. Analysts were expecting $0.47 on sales of $2.21b. Sales increased 19% to $2.33b, topping analysts' forecast of $2.27b. Chip revenues rose 20% to $1.37b, while licensing revenues expanded 20% to $766m. QUALCOMM is in an ongoing patent dispute with rival Broadcom and was issued an injunction against mobile phones containing its chips last month by the U.S. ITC (see full summary). QUALCOMM CEO Paul Jacobs commented "... the next few months represent a crucial litigation time-frame and we can't predict the outcomes at this time." (see earnings call transcript). QUALCOMM said it is interested in reaching a similar deal to the one Broadcom offered Verizon Wireless last week, in which the latter will pay up to $200m as a settlement in order to bypass a ban on QUALCOMM's chips.
Sources: Press release, Bloomberg I, II, MarketWatch, TheStreet.com
Commentary: Sweet Deal For Qualcomm: Are They Smarter Than We Think? • Qualcomm Decline Presents Low Risk Entry Point • Qualcomm, Broadcom and the ITC Ruling: What It Means For Investors
Stocks/ETFs to watch: QUALCOMM (QCOM). Competitors: NOK, BRCM, TXN, Samsung Electronics [not traded in U.S.; see iShares S. Korea (EWY)]. ETFs: Broadband HOLDRs (BDH), Wireless HOLDRs (WMH), iShares Goldman Sachs Networking (IGN)
Related: QCOM Earnings Presentation [pdf], CDMA and WCDMA Handset Shipments Estimate [pdf]
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