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Qualcomm Stock Rises On Higher Earnings Forecast by San Diego Telecom Firm

Posted on: Tuesday, 24 February 2004, 06:00 CST

Feb. 24--SAN DIEGO -- Shares of Qualcomm Inc. rose 5 percent Monday, closing at $62.43, after the wireless communications company raised earnings projections for the quarter ending March 28.

Qualcomm said it expects to earn from 47 to 49 cents per share for the quarter, compared with its Jan. 21 projection of earnings of 34 to 37 cents per share.

The company attributed the higher forecast to greater-than-expected demand for Qualcomm's semiconductor chips used in cell phones and for equipment based on its Code Division Multiple Access technology.

Of particular importance is an ongoing shift to newer "3G" or third-generation cell-phone technologies that can transmit data at higher speeds.

Qualcomm's 3G technology has been more successful at high-speed data transmission than those based on the rival Global System for Mobile Communication technology.

Also, CDMA carriers such as Verizon Wireless have been adding customers at a rapid clip. Verizon is signing up subscribers faster than the combined pace of GSM-based rivals Cingular and AT&T Wireless, which Cingular is in the process of acquiring.

Verizon Communications, the parent company of Verizon Wireless and a major local telephone provider on the East Coast, has a market capitalization, or total stock value, of $102.2 billion. That of AT&T Wireless is $31.3 billion. (Cingular's value can't be rated directly, as it is owned by SBC Communications and BellSouth.)

"Strong quarterly results from Verizon and Sprint PCS in the United States demonstrated that CDMA is increasingly the most popular choice for consumers and businesses, with many able to more readily change carriers due to the implementation of local number portability," Qualcomm Chief Executive Irwin Mark Jacobs said in a statement.

However, Jeremy Lopez, an analyst for the Chicago-based research firm Morningstar, wrote Monday that Qualcomm stock is probably overvalued. Previous Morningstar reports have praised Qualcomm as well-run and skilled at marketing CDMA, but not worth buying until the stock falls significantly.

A Dec. 12 Morningstar report pegged Qualcomm's fair value at $36 per share, and worth consideration for buying at $27.80 per share.

At Monday's closing price, Qualcomm's market capitalization was $50.3 billion.

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(c) 2004, North County Times, Escondido, Calif. Distributed by Knight Ridder/Tribune Business News.

QCOM, VZ, VOD, BLS, SBC, AWE, PCS,

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