Wireless technology developer Qualcomm Inc on Thursday gave a disappointing outlook for earnings and revenue for fiscal 2008, sending its shares down 7 percent in extended trading.
Charter Equity Research analyst Ed Snyder said Qualcomm appeared to be losing market share to rivals such as Broadcom Corp in the market for chips used in high-speed wireless phones.
The surprises are all negative, said Snyder, who also said that due to a change in the way Qualcomm reported revenue from technology license fees, its royalty business appeared to be less profitable than had been expected.
Overall demand for phones is good. Qualcomm's slice of the pie is getting squeezed, he said.
The report was the second big shock for technology companies in 24 hours. Network equipment maker Cisco Systems Inc warned on Wednesday that demand from the financial sector had fallen dramatically.
Qualcomm said revenue and earnings would be below analyst estimates for its fiscal first quarter and the year ahead.
Qualcomm forecast full-year 2008 earnings per share excluding its investment arm and other items, of $2.03 to $2.09, below analysts' average forecast of $2.19 per share, according to Reuters Estimates.
Qualcomm said profit rose to $1.13 billion, or 67 cents a share, for its fiscal fourth quarter ended September 30, from $614 million, or 36 cents a share, in the year-ago quarter. Revenue rose to $2.31 billion from $2 billion.
Excluding its investment arm, and other items, it posted earnings of 54 cents per share, a penny ahead of average analyst estimates.
The company also forecast 2008 revenue of $9.5 billion to $9.9 billion, below average analyst expectations of $9.97 billion.
Its forecast for first-quarter 2008 earnings per share was 50 cents to 52 cents, excluding its investment arm and other items. Average analyst estimates were for earnings of 53 cents per share, according to Reuters Estimates.
Qualcomm's stock had traded up as much as 13 percent from November last year in recent days as investors have long counted on its growth prospects from advanced mobile technology even as it faces legal battles with companies such Nokia Oyj and Broadcom.
Qualcomm's shares fell to $36.80 in extended trading from their Nasdaq close Thursday of $39.76, which was down 3.5 percent from Wednesday's close.
(Reporting by Sinead Carew)