Qualcomm boosts Q3 forecast

Qualcomm sees a bright future despite its ongoing legal battle with Nokia, raising its fiscal-year revenue and profit forecasts on Tuesday after reporting strong results for its second quarter, which ended April 1.

Fallout from the fight with Nokia over patent licenses will hit Qualcomm’s earnings to the tune of $0.04 to 0.05 per share in its fiscal fourth quarter beginning in July, the company estimated on Tuesday. A licensing agreement between the companies expired April 9, and the companies are involved in several disputes over how much Nokia owes Qualcomm in royalties for mobile technology. The estimated impact, which Qualcomm included in its forecast for the first time, anticipates Nokia not paying certain royalties in the fourth quarter.

But the San Diego company still raised its profit forecast for the year to a whole new range, estimating earnings per share of $1.57 to $1.61, compared with an earlier range of $1.44 to $1.49. And Qualcomm now expects annual revenue of between $8.4 billion and $8.7 billion, up from a previous range of $8.1 billion to $8.6 billion. In a statement, CEO Paul Jacobs attributed the brighter forecast to stronger than expected demand for the company’s chipsets and higher shipments of handsets based on CDMA, which Qualcomm pioneered.

For the second quarter, Qualcomm on Tuesday reported revenue of $2.22 billion, up 21 percent from a year earlier, and net income of $726 billion, up 22 percent.

Also on Tuesday, a Qualcomm executive at the Wireless Innovations conference in Redwood City, California, defended the company’s position in its licensing fights. Len Lauer, an executive vice president and group president, called the litigation “unfortunate” but said it will come out well for Qualcomm.

“We feel very, very strong and confident about our business model. We’re going to defend our business model, and our business model at Qualcomm is one that’s based on innovation,” Lauer said. Asked whether renegotiating its deal with Nokia could cause a ripple effect that would change the royalties it gets from other manufacturers, Lauer dismissed the idea, saying Qualcomm frequently renegotiates individual licensing agreements.