Qualcomm (Nasdaq: QCOM) gained a bigger market value than Intel (Nasdaq: INTC) after it forecast results that topped analysts’ predictions, adding to evidence that smartphones are gaining ground at the expense of personal computers.
Shares of San Diego-based Qualcomm jumped 7.5 percent to $62.45 Thursday morning, in New York, giving the largest seller of mobile-phone semiconductors a market capitalization of about $105.7 billion, higher than Intel’s $104.4 billion.
[Shares finished the day at $60.67, dropping Qualcomm back behind Intel – but just barely at $103.34 billion vs. $103.65 billion.]
Qualcomm, which has a research and development office in Raleigh, reached that milestone after forecasting earnings and sales this quarter that showed robust demand for handheld devices.
Under Chief Executive Officer Paul Jacobs, the company is gaining as consumers in developed nations snap up pricey new phones while those in emerging markets upgrade to devices that provide Web access. Intel, a laggard in the market for mobile- phone chips, is being hurt by slack personal-computer sales.
“Qualcomm has absolutely been one of the prime beneficiaries in smartphones and tablets,” said Mike Burton, an analyst at Brean Capital LLC. “This is a very strong report.”
The company said in a statement yesterday that this quarter’s earnings will be 90 cents to 98 cents a share on revenue of $5.6 billion to $6.1 billion. Analysts on average had projected net income of 86 cents on sales of $5.33 billion, according to data compiled by Bloomberg.
Qualcomm stock rose as much as 8.1 percent, the biggest intraday increase in a year. It had increased 6.3 percent this year through yesterday, while shares of Santa Clara, California- based Intel had slumped 14 percent.
Qualcomm’s Jacobs said earnings are being bolstered by strong worldwide demand for smartphones, emerging-market consumers upgrading to more expensive handsets and increasing supply of his latest chips. The company sees those trends persisting next year, even though its projections are based on a “conservative” view of global economic growth, he said.
“There are a lot of trends that are coming together for us,” Jacobs said in a telephone interview. “Demand continues to go up.”
The company is also generating more revenue from its licenses, which cover the technology that provides high-speed data connections in smartphones.
Qualcomm had said earlier this year that limited supply from contract manufacturer Taiwan Semiconductor Manufacturing Co. was requiring it to increase spending and enlist other vendors. Shortages had forced some customers to postpone the introduction of new smartphone models. Those phones are now going on sale, lifting Qualcomm’s chip sales and licensing revenue.
Net income in the fourth quarter, which ended Sept. 30, was $1.27 billion, or 73 cents a share, compared with $1.06 billion, or 62 cents, a year earlier. Sales rose 18 percent to $4.87 billion. Analysts on average had predicted sales of $4.65 billion.
Profit before certain items in fiscal 2013 will be $4.12 to $4.32 a share on revenue of $23 billion to $24 billion, Qualcomm said in the statement. Analysts on average had projected profit of $4.13 a share and sales of $21.7 billion, according to data compiled by Bloomberg.
The majority of Qualcomm’s revenue comes from baseband chips, which connect phones to cellular networks, sold to wireless device makers such as Samsung Electronics Co., Apple Inc. and HTC Corp. The bulk of the company’s profit comes from the licensing of so-called code division multiple access technology, a radio-communications standard used in other chips, handsets and phone systems.
Some 711.4 million smartphones will be sold this year, a gain of 44 percent, Canaccord Genuity Inc. analysts projected in a report. The market will grow 35.4 percent next year, the analysts estimated.
Qualcomm’s licensing revenue is calculated as a percentage of the average selling price of phones. That’s been bolstered by increasing use of 3G connections in developing markets such as China, and growing demand for smartphones in Western Europe, the U.S. and parts of East Asia.
The company is also expanding into the market for application processors, the chips that run programs in phones and tablet computers, and will be supplying its Snapdragon product to computer makers using the new version of Microsoft Corp.’s Windows operating system.