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Qualcomm Raises Quarterly Sales And Earnings Guidance

Qualcomm raised its forecast for fiscal second-quarter earnings and revenue on Tuesday, citing stronger-than-expected worldwide demand for products based on its CDMA mobile phone technology.

Shares rose 3% on the news, which followed an update from bigger rival Texas Instruments the night before. TI narrowed its forecast range for the quarter but kept the midpoint steady.

Wireless chip and technology license supplier Qualcomm forecast quarterly earnings of 48 cents to 49 cents a share, excluding its investment arm and other items, compared with its previous estimate of 42 to 44 cents a share.

It raised its revenue outlook for the quarter ending April 1 to $2.1 billion to $2.2 billion, up from its previous estimate of $2 billion to $2.1 billion.

Sanford Bernstein analyst Paul Sagawa said the improved outlook appeared to come from better-than-expected demand for CDMA phones particularly in India, as well as strength in its technology royalty business and tight expense controls.

"It's likely the company did a good job in controlling its operating expenses ... They have a very significant beat on the earnings line," said Sagawa. He said it could mean that Qualcomm's legal expenses were not as steep as expected.

Analysts on average expected earnings of 43 cents per share on revenue of $2.08 billion, according to Reuters Estimates.

Qualcomm is the dominant chip supplier for phones based on CDMA, the most widely used wireless technology in the United States. It also sells licenses and chips for W-CDMA, a wireless technology becoming popular in Europe and other parts of the world. Qualcomm and TI compete on W-CDMA chips.

Qualcomm supplies handset makers such as LG Electronics and Samsung Electronics. TI's biggest customer is Nokia.

"There might be some instances where there was a pickup of market share but I wouldn't say that's the primary driver," Sagawa said.

Texas Instruments , which is recovering from a falling inventories among its customers, saw its shares fall more than 2% to $31.84 after its guidance which disappointed some investors who had hoped for a quicker comeback.

Qualcomm said its new forecast is based on the shipment of about 60 to 61 million mobile phone chips compared with its prior target of 55 million to 57 million units.

Qualcomm, which accounts for royalties on products shipped in the December quarter in the current quarter, estimated that 91 million CDMA units were shipped in the December quarter with an average selling price of $214 compared with its prior target of 82 million to 86 million units at an average price of $217.

Qualcomm, which was scheduled to hold its shareholders meeting later on Tuesday, also said it was increasing its quarterly dividend to 14 cents per share from 12 cents a share, effective for dividends payable after the March 30.

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