Hitting a 3 1/2-year high
Interview: Qualcomm
>> after hitting a 3 1/2-year high tuesday, shares of qualcomm fell for a third day in a row this week, down more than 3.5% in friday's trade after the company raised questions about the way it accounts for royalty payments. the company also said while this quarter's sales will miss the high end of previous forecasts, profit may top expectations. su keenan was on the qualcomm beat today and summed it up.
>> it's a lot for investors to sort through, but they appear to be focused on the accounting issue. qualcomm maximum a large portion of its revenue from the licensing of its wireless cell phone technology. until now, it's recorded estimates of these so-called royalty payments as revenue. month says in advance. qualcomm says an accounting change could result in a one-time revenue reduction of roughly $300 million in the fourth quarter. that changed, together with falling chip prices, will likely hurt next year's revenue.
>> average selling prices for their chip business, which is really represents about 60% of their overall revenues still to date, it looks like the overall pricing is declining from what they were getting previously of about $22 per chip. now it seems like they're getting more like the mid $2 per chip, so that definitely impacts their overall revenue stream.
>> qualcomm also narrowed its fourth quarter sales forecasts, saying year-over-year growth will be as much as 62%, other than the previous range of 57% to 65%. this adds to evidence of a slowdown in demand for electronics, both texas instruments and intel recentlyly lowered their outlook. state street's chief market strategist says excess capacity remains a key issue for technology stocks.
>> you're not going to get the kind of rally that people are looking for until you get the nod from the company that they see a significant, sustained pickup in demand.
>> and back to qualcomm. shares are up 44% year to date. earlier this week, they were at their highest price in three years. matt?
>> yep, excellent stuff. thanks, su. appreciate it. the nasdaq composite climbed for the sect day in seven. june grassor has details on today's trading from the nasdaq site in sometimes square.
>> one of the industry groups leading the nasdaq higher today was the computer index, as it has been all week. some of the leaders in that group, intel, microsoft, oracle, and yahoo. and two of the stocks that were leading movers by percentage in the nasdaq today, cintas and biomet. cintas, the maker of airlines for uniforms and hotels, said earnings will be as much as $1.80 a share on sales of $3 billion to $3.2 billion. analysts had expected an average profit of $1.78 a share on $3.06 billion in revenue. biomet, the maker of orthopedic devices, reported fiscal fourth quarter profit up six cents a share, and that beat the estimate by one cent. the philadelphia semiconductor index has been leading the nasdaq higher today. some of the leading movers there were xilinx and maxim integrated. world airways advanced today after it signed an agreement for about $23 million to ship cargo between germany and china. two companies that were downgraded today, cisco systems and ebay. cisco systems was cut to equal weight from overeight at lehman brothers, citing mixed industry trends in august and september.
