Qualcomm Earnings Preview (QCOM, BRCM, MOT, NOK) (January 23, 2008)

Qualcomm (NASDAQ: QCOM) is set to report its second quarter 2008 earnings after the close today.  The company is expected to post $0.53 EPS on revenues of $2.41 Billion, according to First Call.  For the coming quarter estimates are $0.52 EPS on $2.44 Billion in revenues, and for Fiscal September-2008 projections are $2.12 EPS on $9.83 Billion in revenues.

The company raised guidance just about 30 days ago.  It put guidance at $0.52 to $0.53 EPS, up from a prior range of $0.50 to $0.52 EPS; and it put revenues at the high-end of a $2.3 to $2.4 Billion range.  That raised guidance was due to a better selling of mobile station modem chips of approximately 78 million units, compared to forecasts of 74 to 78 million.

Analysts still have an average price target north of $50.00 on this stock, which is more than 30% higher than today’s prices.  This is also at the bottom of its 52-week trading band and that is actually at the bottom of a two-year trading band.  Options trading is hard to peg with so much time value and with options volatility running so high, but it appears that the options traders are braced for a move of up to $2.50 in either direction.  We caution using options as a "prediction tool" in the current environment.

Interestingly enough, the dismal report out of Motorola (NYSE: MOT) has not really impacted shares as much as one would guess; and that is after Qualcomm expanded its relationship with the troubled handset maker.  It seems to almost be immune from legal worries as far as how its stock reacts.  This ongoing soccer match of litigation with Broadcom (NASDAQ: BRCM).  Even the customer loss of Nokia (NYSE: NOK) and impending suit there has yet to make a serious dent into the company as one might have guessed.

Jon C. Ogg
January 23, 2008