Investors anxious on Qualcomm's revenue slowdown

Qualcomm's stock tumbled more than 14 percent, to around $40 per share, after the company reduced its fiscal year revenue expectations due to what it said was tightened competition and economic struggles in Europe and Japan.

"As anticipated, we have seen a competitive pricing environment in the chipset market and are proactively managing within this dynamic to grow our market share," said Qualcomm CEO Paul Jacobs in the company's earnings release. "A subdued economic recovery in developed regions, including Europe and Japan, combined with relative strength at the lower end of the market, is changing our estimated 3G device average selling price and chipset mix for this fiscal year. Accordingly, we are modestly reducing our fiscal year revenue estimates to reflect this near-term market situation, but are maintaining our earnings per share guidance."

Specifically, the company said it now expects fiscal 2010 revenues of between $10.4 billion and $11 billion, lower than its initial expectations of between $10.5 billion and $11.3 billion. However, the company maintained its diluted earnings-per-share growth expectations of between 64 and 85 percent, year-over-year.

As for the company's first fiscal quarter 2010 results, Qualcomm posted revenues of $2.67 billion, up 6 percent year-over-year and down 1 percent sequentially. The chip maker's net income for the quarter clocked in at $841 million, up 147 percent year-over-year and 5 percent sequentially. The pop in Qualcomm's net income year-over-year was primarily due to "a significant improvement in net investment income as our marketable securities recovered value and financial markets stabilized," the company said.

Qualcomm pointed to a number of recent business initiatives in an effort to highlight its forward movement (and possibly pacify worried investors). The company trumpeted the success of its Snapdragon chipset (recently featured in a number of high-profile smartphones such Google's Nexus One), its BREW Mobile Platform operating system (recently incorporated into HTC's latest feature phone play) and its FLO TV mobile video operation (set to launch a major advertising effort during the upcoming Super Bowl).

"We are pleased with our performance this quarter, driven by healthy demand for our chipsets, strong shipments of 3G devices by our licensees and lower operating expenses," purred Jacobs. "We're executing on our strategic objectives and reaffirming our 2010 3G device forecast, an increase of 21 percent year-over-year."

For more:
- see this release
- see this SeekingAlpha conference call transcript
- see this Reuters article
- see this MarketWatch article
- see full coverage of wireless in the fourth quarter

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