Qualcomm Inc., the largest maker of mobile-phone chips, projected third-quarter sales and profit that fell short of analysts’ estimates as it increases spending to improve output of chips.
Sales for the quarter ending in June will be $3.62 billion, the San Diego-based company said in a statement. Analysts on average estimated $4.81 billion, according to data compiled by Bloomberg. Net income will be 61 cents a share, Qualcomm said, compared with the average prediction of 77 cents.
Qualcomm’s licensing revenue, which provides the majority of its profit, typically dips during the third quarter, reflecting seasonal patterns in consumer demand. The disappointing forecast may be fueling concern that profitability growth has peaked, said Alex Gauna, a San Francisco-based analyst at JMP Securities.
“It’s the best and most attractive growth segment in technology, but a lot of that’s known and already in the stock,” said Gauna. “The June quarter is their weakest royalty quarter.”
Qualcomm shares slid as low as $62 following the report. They had fallen less than 1 percent to $66.99 at the close in New York. Before Wednesday, the stock’s 23 percent increase this year was more than double the gain in the Standard & Poor’s 500 Index, and outpaced the 16 percent rise in the Philadelphia Semiconductor Index, which investors use to track the performance of chip-industry stocks.
Net income in the second quarter, which ended March 25, was $2.23 billion, or $1.28 a share, compared with $999 million, or 59 cents a share, a year earlier. Sales rose 28 percent to $4.94 billion. Analysts on average had predicted earnings of $1.10 a share and sales of $4.84 billion.
Qualcomm supplies baseband chips, which connect phones to cellular networks, to wireless device makers, including Samsung Electronics Co., Apple Inc. and HTC Corp. Those companies account for more than 30 percent of Qualcomm’s sales, according to a Bloomberg supply-chain analysis.
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 processors to computer makers using the new version of Microsoft Corp.’s Windows software.
Qualcomm’s licensing revenue, which provides more than 70 percent of its profit, is calculated as a percentage of the average selling price of phones. That income accrues regardless of whether device makers use the company’s chips.
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