Qualcomm increased its guidance for Q2 2006. From the company's press release:
Based on the current business outlook, we now anticipate second fiscal quarter revenues for Qualcomm pro forma to be approximately $1.75 to $1.82 billion. We now anticipate second fiscal quarter Qualcomm pro forma diluted earnings per share to be approximately $0.40 to $0.41, compared to $0.29 in the year ago quarter.
This estimate is based on the shipment of approximately 47-48 million Mobile Station Modem (NYSE:MSM) chips during the quarter compared to approximately 37 million in the year ago quarter and approximately 47 million in the prior quarter. We previously anticipated second fiscal quarter Qualcomm pro forma revenues of $1.63 to $1.73 billion, Qualcomm pro forma diluted earnings per share of approximately $0.35 to $0.37 and estimated shipments of approximately 44 to 46 million MSM chips.
Wall Street's reception to the news was overall upbeat:
T. Michael Walkley, Piper Jaffray: "With more than 1.7 billion GSM subscribers potentially on a migration path to CDMA-based technologies over the next decade, we believe Qualcomm should post strong long-term earnings growth relative to our coverage universe." Walkley increased his price target from $53 to $55, maintaining his 'Outperform' rating on the stock.
Tim Luke, Lehman Brothers: "While investors had viewed prior gudiance as conservative and had expected the CDMA innovator to update its guidance, we believe this update comes in ahead of both our and Street expectations. We continue to expect ongoing upside to our estimates as we move thru 2006. Luke reiterated his 'Overweight' rating on the stock and his $52 price target.
Brian Modoff, Deutsche Bank North America:"We think overall demand remains strong. We're forecasting 17-percent growth for wireless handset sales, and we continue to believe that's going to be the case."
Inder M. Singh, Prudential: In a note to clients Singh wrote that QCOM is well positioned to benefit from 3G, and does not expect major impact this year from pending litigation with the European Commission. Singh maintained his 'Overweight' rating on the stock, with a target price of $57.
Ehud Gelblum, J.P. Morgan (in TheStreet.com): Increased phone sales translate to approximately $66 million in additional revenue to be booked in the current quarter. "Gelblum estimates the upside will contribute about $50 million more to second-quarter top line, based on an average selling price of $20 a chip." Gelblum maintained his buy rating on the stock.