Despite attacks, Qualcomm increases expectations

Qualcomm raised its revenue expectations amid its legal battles with Nokia and Broadcom

Despite attacks on its business model, including a particularly rancorous battle with Nokia, Qualcomm said its revenue will be higher than expected for its fiscal second quarter.

Instead of pro forma revenue of US$2 billion to US$2.1 billion, Qualcomm expects to report US$2.1 billion to US$2.2 billion for its second quarter, which ends April 1. The new estimate is based on better-than-expected shipments of Qualcomm's Mobile Station Modem chips as well as CDMA2000 (Code Division Multiple Access) and WCDMA (Wideband CDMA) chips.

Despite growing mobile phone penetration in Europe and North America, sales of CDMA2000 and WCDMA were particularly strong in those regions, Qualcomm said.

Qualcomm competitor Texas Instruments (TI) doesn't expect to have done quite as well in the quarter. On Monday, TI revised its expectations for revenue in the first quarter of this year to be potentially lower. Instead of US$3.01 billion to US$3.28 billion, TI said revenue will likely fall between US$3.07 billion and $3.22 billion.

Qualcomm's raised expectations come amid attacks on its business. A group of vendors including Nokia filed a complaint with the European Commission in late 2005 charging Qualcomm with anticompetitive behavior. Nokia and others claim that Qualcomm isn't licensing its technology that contributes to certain industry standards on a fair basis, as promised.

Qualcomm is also involved in re-negotiations with Nokia regarding their contract, which expires April 7. That re-negotiation process has been marred by patent infringement lawsuits that Qualcomm has filed against Nokia in France, the U.S., the U.K., Germany and Italy as well as with the International Trade Commission.

Qualcomm has also been at battle with chip maker Broadcom. The two settled some of their patent claims against each other recently but are still arguing over others.

Qualcomm expects additional solid growth in the future in part due to a couple of developments. The GSM Association chose an LG Electronics handset that uses a Qualcomm chipset in a contest to supply a low-cost 3G phone to participating operators around the globe. In addition, Verizon Wireless Inc. and AT&T Inc. have said they'll use Qualcomm's mobile TV platform.

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Nancy Gohring

IDG News Service
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