Qualcomm reports strong Q3 earnings thanks in part to Atheros

Qualcomm (NASDAQ:QCOM) announced higher-than-expected earnings in its fiscal third quarter thanks to strong global demand for smartphones and its acquisition of Wi-Fi chipmaker Atheros Communications. Still, investors were jittery about Qualcomm's fiscal fourth-quarter guidance for licensing and chip shipments.

"Our results and guidance really highlight the fact that around the world, smartphone excitement is continuing," CEO Paul Jacobs said during a conference call with analysts Wednesday afternoon. "As we look beyond that to mobile computing and new tablet devices coming to market, I think there's just a lot to look forward to."

The company reported net profit of $1.04 billion in the quarter, up 35 percent from $767 million in the year-ago quarter. Total revenue climbed to $3.62 billion, up 34 percent from $2.7 billion in the year-ago period.  

Qualcomm said it shipped a record 120 million chipsets during the third quarter, representing a 17 percent increase from the previous year. The company forecast another 120 million to 125 million chipsets to be shipped in the fourth quarter.

The fourth-quarter forecast is flat because some of the vendor's customers had stockpiled an inventory buffer because of the earthquake in Japan, said Steve Mollenkopf, head of Qualcomm's chipset business, on the call.

In the licensing realm, Qualcomm said devices sales totaled $36.4 billion, which was slightly lower than its midpoint estimation of $37 billion. As such, Qualcomm's shares fell 2.6 percent to $55.80 in after-hours trading.

"I expected the current quarter's licensing results to be strong, and they were a little soft," Bernstein analyst Stacy Rasgon told Dow Jones Newswires. "The chipset guide also looks a little light."

For the fourth fiscal quarter, Qualcomm estimates that overall profit will come in at 75 cents to 80 cents per share, and the company expects revenue of between $3.86 billion and $4.16 billion.

Qualcomm also said it is investing slightly more in its research and development investments in the fiscal fourth quarter to support new process technologies, the commercialization of its multicore and LTE offerings and to address new customer opportunities.

For more:
- see this release
- see this Dow Jones Newswires article (sub. req.)

Special Report: Wireless in the second quarter of 2011

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