Dare I say that San Diego wireless titan Qualcomm
In its fiscal second-quarter earnings release, Qualcomm not only beat Wall Street estimates on both the top and bottom line, but once again bumped up guidance for the coming quarter and fiscal year. Cellular phones incorporating Qualcomm's innovations are selling faster than flypaper at a dairy farm, fueling demand for its chips and increasing high-margin royalty revenue.
While analysts had on average expected $0.48 per-share profit on revenue of $2.19 billion this quarter, Qualcomm actually earned $0.50 per share on $2.22 billion in revenue. Royalties from licensees such as Motorola
Looking at the remainder of Qualcomm's fiscal year, the company felt confident that higher sales of cellular phones would boost full-year earnings to somewhere between $1.84 and $1.88 per share, well ahead of the $1.72 to $1.77 per share it had forecast earlier this year. Part of Qualcomm's optimism about the future stems from a positive outcome of arbitration hearings with Ericsson
Particularly impressive is that Qualcomm's vision of higher revenue and profits have already factored in a negative $0.04 to $0.05 per-share earnings hit from Nokia
The prospects of even higher profit in the coming quarters will help soothe analysts and investors who have lamented increasing litigation costs at Qualcomm. The company has maintained that the estimated $200 million it's spending on legal defense this year is a wise investment, and I agree. As long as Qualcomm keeps growing cash flow with chronic regularity, the lawyers are worth it.
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Fool contributor Dave Mock dares not kick habits when they're down, especially profitable habits. He owns shares of Motorola and Qualcomm. Dave is the author of The Qualcomm Equation. The Fool has a disclosure policy.