(Source: Qualcomm)
Massive profit bests even the highest analyst expectation

It's relatively rare to see every single analyst miss when forecasting a company's earnings.  When that happens, you know the news is either very good -- or very bad.

I. A Pleasant Sort of Surprise

Fortunately for Qualcomm, Inc. (QCOM), it falls under the former category.  On Tuesday it announced its fiscal Q4 2012 results [PDF].  The San Diego, Calif.-based smartphone chipmaker revealed that in the quarter ending in September it made $4.87B USD in revenue and $1.27B USD in net income (profit).

Analysts had predicted a solid, but sleepier $4.66B USD revenue haul, with the actual results approaching the high end of 37 estimates collected by the UK financial analysis agency The Financial Times.

But the big surprise was the profit.  Analysts had expected only $1.16B USD in profit.  Even the most optimistic analyst only predicted $1.24B USD in profit ($0.87 USD/share).  In other words Qualcomm blew away all the predictions regarding profit, and smoked the average expectation by 9 percent.

Qualcomm Snapdragon on Nokia
[Image Source: Jason Mick/DailyTech]

Dr. Paul E. Jacobs, chairman and CEO of Qualcomm, cheered the strong performance, commenting, "I am very pleased with our performance this year. We delivered record revenues, earnings and MSM chipset shipments driven by increasing global consumption of wireless data across a diverse range of devices, particularly smartphones."

The chipmaking chief predicts "double-digit revenue growth" in fiscal 2013, driven on the back of the company's core chipset and system-on-a-chip businesses.

II. Future Looks Bright

In the fiscal Q4, Qualcomm shipped 141 million Snapdragon chipsets globally, an 11 percent rise from 2011.  Additionally, an estimated 210 to 214 million devices sold carried a Qualcomm 3G/4G chip.

Qualcomm makes its system-on-a-chip central processing units based on licensed instruction sets and intellectual property cores from UK reduced instruction set computer (RISC) architecture giant ARM Holdings plc (LON:ARM).  Currently, Qualcomm's big push involves the 28 nm Snapdragon 4, manufactured by Taiwan Semiconductor Manufacturing Comp., Ltd. (TPE:2330and Samsung Electronics Comp., Ltd. (KSC:005930).  While many Snapdragon 4 chips are destined for traditional Android smartphones/tablets, the Qualcomm chips are also popping up in Windows 8 tablets, a pivotal new business target.

Samsung Ativ Tab
The Windows RT Samsung Ativ Tab carries a Snapdragon 4 SoC.

Qualcomm, which offers a quarterly dividend to shareholders, has also been repurchasing stock to further share its profits with investors.  The company is currently sitting on $26.8B USD in cash, meaning that it has a lot of money for acquisitions, should it choose to make a move.

Compared to some other ARM-architecture chipmakers like NVIDIA Corp. (NVDA), Qualcomm's Q1 2013 outlook is relatively optimistic.  Despite a slowing semiconductor and device market, the Californian company hopes to sustain double-digit growth in many metrics over the holiday.  The only expected dip is in diluted shares, as Qualcomm moves to shutter its discontinued Flo TV business.

Sources: Qualcomm, FT [analyst estimates]

"We don't know how to make a $500 computer that's not a piece of junk." -- Apple CEO Steve Jobs

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