Yesterday, wireless bellwether Qualcomm (NASDAQ:QCOM) reported its second fiscal quarter to an edgy audience of investors looking for more signs of optimism in a tepid market. While a few peers, including Lucent (NYSE:LU) and Motorola (NYSE:MOT), positively surprised telecom investors earlier in the week, Qualcomm couldn't muster the same. It disappointed with its forward guidance.

On the bright side, in its second quarter of 2005, Qualcomm earned $532 million on $1.37 billion in revenue, up 12% and 9% year over year, respectively. Free cash flow for the quarter was $741 million, leaving the company sitting on a pile of $8.3 billion. The continued increase in cash allowed the company to grow its dividend to $0.09 per share and boost its stock repurchase plan.

Margins dipped slightly, particularly in the chip division, as the company is still spending heavily on R&D -- $252 million this quarter. The San Diego headquarters is a hub of construction; the company is investing in multiple buildings to house new engineering staff as it continues on a resource growth cycle. According to CEO Irwin Jacobs, the company continues to believe that investments in R&D at this point will pay off in the long term.

What really irked analysts, though, was the slight reduction in forward guidance of certain metrics. The main culprit was the realization that the WCDMA flavor of Qualcomm's technology was not being adopted as quickly as anticipated. The company had expected European operators in particular to push more subscribers onto the latest technology, which gives them more feature-rich applications, such as streamed video and music.

I commented in my coverage of Qualcomm's previous-quarter earnings that the uptake in WCDMA was the key growth metric to watch going forward. Qualcomm's stock had a high level of expectation built into it as it closed out 2004, and this update is evidence that even its own optimism about growth was ahead of the curve. The company reported that WCDMA made up 32% of total royalties from licensees, so for the near future, the stock will be strongly influenced by the proliferation of this technology.

The second half of this year could be different, though, and strong growth in advanced wireless handsets may resume. Investors may want to consider the current market pessimism as an opportunity to check into Qualcomm's shares.

Fool contributor Dave Mock is a "glass-half-full" kind of guy. He owns shares of Motorola and Lucent but has no position in Qualcomm, though he has written its first corporate biography -- The Qualcomm Equation.