Qualcomm cuts forecast as 3G market stagnates

Qualcomm expects its income to decline by up to 38% this quarter as demand for CDMA-based chipsets continues to slow.

The company has forecast that it will ship around 60-65 million MSM chips this quarter, down from 85 million a year ago. As a result income is expected to fall by 26-38% year-on-year to as little as $500 million. Qualcomm expects its revenue to decline by 6-14% year-on-year, slumping to $2.25-2.45 billion. 

The company has also downgraded its full year estimates, shaving $300-400 million from its expected operating income, now revised to $2.2-2.5 billion. It expects its revenue to decline by up to 17% year-on-year, slumping to $9.3-9.8 billion.

Qualcomm has also revised its sales forecast downward across the board, predicting it will sell millions fewer CDMA and W-CDMA units than expected. Combined, Qualcomm is expecting to ship around 565 million units, but had earlier predicted sales of 600 million.

The economic crisis has already weakened CDMA sales, according to Qualcomm CEO Paul Jacobs. "The CDMA inventory channel has contracted as we expected, and the business environment continues to remain uncertain," he said.

"Our growth is tied to 3G," he said.

Qualcomm's net income fell 56% year-on-year to $341 million last quarter. Revenues reached $2.52 billion, up 3% year-on-year but down 25% sequentially.

But Jacobs said first quarter revenues were at the high end of guidance and operating income exceeded guidance.

Qualcomm shares fell nearly 5% following the announcement to $35.13.