Qualcomm [QCOM] yesterday reported both their fourth quarter [4Q 2010] fiscal earnings for 2010, but they also reported the earnings for all of fiscal 2010 which ends in the calendar year in September. For 4Q 2010 [calendar 3Q 2010], Qualcomm reported revenues of $2.95B, up 10% year over year and up 9% over the previous quarter. On that $2.95B, Qualcomm reported an operating income of $837M, which was up 40% from the same quarter last year and up 6% sequentially. This resulted in a net income of $865M, which indicates that Qualcomm is earning additional income from non-business operations to supplement the $837M.
QSI [Qualcomm Strategic Initiatives] saw an expense of $132M primarily due to demise of the FLO TV service which resulted in a loss for the QSI segment of $0.05 per share. This did slightly drag down the quarter?s overall net income, but in the end Qualcomm?s quarterly earnings still outshined expectations. In the quarter alone, Qualcomm shipped 111M units of CDMA-based MSM devices.
For the fiscal year 2010, revenues were up to $10.99B up 6% over the previous year. QCOM also reported an operating income of $3.28B up 47% year over year. The biggest and most surprising figure is that for FY 2010, Qualcomm?s net income was $3.25B up 104% over last year. This indicates that Qualcomm is without a doubt experiencing exponential growth and is delivering products that are gaining unbelievably strong admiration within the mobile sector. Even though that Qualcomm has had problems with business divisions like FLOTV that are part of the QSI division, Qualcomm?s core business of mobile chipsets has outshined it. In fiscal 2010, Qualcomm shipped approximately 399M which was up 26% year over year. As a whole, estimated CDMA-based device shipments in fiscal 2010 were around 561 to 577 million and had an ASP of $183 to $189 per unit resulting in approximately $105.7B in sales alone. The 105.7B sales figure shows a growth of 7% over the previous year, indicating that CDMA continues to grow even though newer technologies like LTE, HSPA+ and WiMax are beginning to enter the arena. In the future, Qualcomm?s leadership in LTE should give it the ability to continue to claim CDMA device shipments even when they?re going to be primarily used for LTE.
Qualcomm?s current guidance for 1Q 2011 indicates increased growth of revenue with an estimated range of $3.05B to $3.35B which indicates that they are leaving quite a bit of room for growth. This is compared to the last quarter?s $2.95B reported revenues. In addition to increased revenue, Qualcomm expects their EPS to increase from $0.53 per share to $0.58-$0.62 per share reflecting a 16%-24% increase. This reflects Qualcomm’s expectations of increased shipments for both CDMA and LTE technologies. They also noted an expected yet another QSI LPS of $0.05 which is likely due to expected costs that Qualcomm may have to incur during that quarter [QSI] including the payment of the $1.09B loan for an investment in wireless spectrums in India which is due Dec 2010. In addition to this, Qualcomm expects shipments of MSM chipsets to increase from 111M to 115M-119M; an increase of 4 to 8M. This expected growth in shipments is what is driving the expected increase of about 20% in EPS.
Overall, Qualcomm has been not only increasing their own growth estimates but at the same time has been beating them. These estimates are not only for chipset shipments, but also for revenue and profits. Across the board Qualcomm is outperforming theirs and everyone else?s expectations, and we don?t really see that slowing down any time soon. This is especially true considering the launch of Microsoft?s Windows Phone 7 which is utilizing Qualcomm?s chipsets as the reference platform requiring no less than a 1GHz processor which Qualcomm Snapdragon is more than capable of operating at. This is in addition to the fact that Qualcomm will likely ship more LTE chipsets to handset makers as they prepare for the launch of Verizon and other operators? LTE networks later this year. Currently, at the close of the markets QCOM?s stock price is up $2.65 [5.80%] on the bright* outlook and outperforming earnings report.