Wireless chip maker Qualcomm Inc's third-quarter profit was better than expected and the company raised its guidance for the current quarter due to strong demand for smartphones.

Yet Qualcomm shares still fell 2.6 percent in late trading on Wednesday as some investors had hoped for a better outlook for this quarter because they expect Qualcomm to supply chips for the next Apple Inc iPhone.

It's a good report. It's certainly better than what people expected, but it's now a blow-out, Charter Equity Research analyst Ed Snyder said.

In particular, some investors might be disappointed with Qualcomm's forecast for 120 million to 125 million wireless MSM chips shipments in the current quarter, which compared with Snyder's expectation for 130 million.

But still Snyder said: This is a solid report with good guidance as they're heading into what I consider to be a very strong second half (of 2011).

Qualcomm raised its earnings per share guidance for the full year 2011 to a range of $3.15 to $3.20 from its previous expectation for $3.05 to $3.13.

It increased its revenue target for the year to a range of $14.7 billion to $15 billion from its previous expectation of $14.1 billion to $14.7 billion.

Qualcomm's profit rose to $1.035 billion, or 61 cents per share, for its fiscal third quarter ended in June 26 from $767 million, or 47 cents per share, in the same quarter the year before. Excluding unusual items, Qualcomm earnings of 73 cents per share were ahead of analyst expectations for 71 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose to $3.62 billion from $2.7 billion. Wall Street analysts had expected revenue of $3.59 billion, according to Thomson Reuters I/B/E/S.

On May 24, Qualcomm said it completed its acquisition of another wireless chip maker, Atheros Communications.

Qualcomm shares fell to $55.77 in late trading after closing at $57.30 in the regular Nasdaq session.

(Reporting by Sinead Carew; editing by Andre Grenon)