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Qualcomm's upbeat profit forecast, results send shares higher

Qualcomm's upbeat profit forecast, results send shares higher

FILE PHOTO: A Qualcomm sign is pictured at Mobile World Congress (MWC) in Shanghai, China June 28, 2019. REUTERS/Aly Song

(Reuters) - Qualcomm Inc (QCOM.O) forecast current-quarter profit above Wall Street expectations and beat estimates for fourth-quarter revenue from its closely watched licensing business, sending its shares up 5% in extended trading.

The world’s biggest supplier of mobile phone chips expects between 1.75 billion and 1.85 billion smart devices with modem chips, including 175 million to 225 million 5G handsets, to be sold in 2020.

As Qualcomm collects license fees on devices that use cellular connections to wireless data networks, more total devices sold often results in higher revenue and profits for the company.

The results come a week after Apple Inc (AAPL.O) calmed Wall Street nerves with an improvement in sales in China, the world’s largest smartphones market, and follow strong earnings from chipmaker Intel Corp (INTC.O) last month.

Qualcomm, which generates most of its profits by licensing its technology to mobile phone makers and others, said revenue in the segment was $1.16 billion, beating estimates of $1.10 billion, according to FactSet.

Excluding items, the company earned 78 cents per share, topping analysts’ average estimate of 71 cents.

Revenue in the fourth-quarter fell about 17% to $4.81 billion, but beat analysts’ estimates of $4.70 billion.

The company expects first-quarter adjusted profit of $1.20 per share, above estimates of 83 cents, according to IBES data from Refinitiv.

Reporting by Munsif Vengattil in Bengaluru and Stephen Nellis in San Francisco; Editing by Sriraj Kalluvila

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