Qualcomm revenue up by just 4 percent, weak growth in China

Qualcomm research center in California

Telecom equipment and semiconductor maker, Qualcomm, Inc., reported fiscal second-quarter revenue of $6.37 billion, up 4 percent year-on-year. This was its smallest quarterly revenue increase since 2010 when revenue shrank by 2 percent.

It was also far below than the quarterly growth rates of 20 percent Qualcomm investors were used to until recently.

Qualcomm reported a second quarter net income of $1.96 billion, up 5 percent. GAAP diluted earnings per share were $1.14 while its non-GAAP earnings per share were $1.31, above its previous forecast of between $1.15 and $1.25.

Qualcomm said revenue in the fiscal third quarter that ends in June will be between $6.2 billion and $6.8 billion. Analysts on average expected third-quarter revenue of $6.59 billion.

Analysts trace Qualcomm's challenges to a weakening smartphone market shifting to China. Qualcomm's once-impressive revenue growth is slackening and the company is focusing on cost cutting to preserve its profitability instead of growth.

Qualcomm CEO Steve Mollenkopf said weaker than expected growth in China hurt Qualcomm's results in the quarter.

"We think that what's happening there is that is in anticipation of the launch of LTE," Mollenkopf said.

China Mobile is preparing to launch a new, faster network with 4G, or LTE, technology. He said he expects improvements in fiscal 2014 as China Mobile, the world's largest mobile carrier, rolls out its new 4G network.

Most of Qualcomm's revenue comes from selling baseband chips that enable phones to communicate with carrier networks. Most of its profit comes from licensing patents for its widely used CDMA cellphone technology.

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