Qualcomm’s Profit, Sales Up on Cellphone Demand

Qualcomm Inc., the San Diego maker of mobile phone chips, said Wednesday that fiscal second-quarter profit rose 11% on higher sales of handsets that surf the Internet and take pictures.

Net income increased to $593 million, or 34 cents a share, from $532 million, or 32 cents, a year earlier, Qualcomm said. Revenue in the period ended March 26 climbed 34% to $1.83 billion.

Qualcomm benefited from a surge in demand for phones that use faster third-generation, or 3G, technology and for lower-priced handsets in emerging markets. The results echo those from larger competitor Texas Instruments Inc., which Tuesday said profit jumped 42% on higher sales in India and China.

Shares of Qualcomm closed at $52.50, then fell 40 cents to $52.10 in after-hours trading..

Profit this quarter may miss some analysts’ estimates. Qualcomm forecast fiscal third-quarter sales of $1.77 billion to $1.87 billion, generating profit of 36 cents to 38 cents a share, excluding some costs. Analysts on average predict earnings of 37 cents, according to Thomson Financial.

Royalty revenue rose 38% to $679 million in the company’s second quarter, while profit jumped 40% to $626 million. Qualcomm received 65% of its pretax profit from licensing products, with the rest coming from the sale of chipsets to manufacturers including Samsung Electronics Co. and an investment unit.

Chip sales in the period rose 36% to $1.02 billion, and shipments totaled 49 million, topping Qualcomm’s March 7 forecast for 47 million to 48 million units. Qualcomm shipped 37 million chipsets in the year-ago period.

The royalty business has been under investigation by the European Commission after companies including Texas Instruments and Nokia claimed Qualcomm charged “excessive” fees. Qualcomm has denied the allegations.

The company Wednesday boosted its profit forecast for the year, excluding some costs, to as much as $1.57 a share on sales of as much as $7.4 billion.