Some greater expectations: Electronics cos. are raising fiscal financial guidance - Business & Finance

Electronic News, March 4, 2002 by Heidi Elliott

Though these are not the best of times, they are no longer the worst.

Electronics companies are seeing positive indicators that the much-loathed downturn is finally being beaten back. Last week wireless telecommunications company Qualcomm Inc. held a midquarter update with investors-an unusual move for the San Diego-based company--to reaf-firm its earnings guidance and note that the quarter is coming in at the high end of the expectation range. Qualcomm expects pro forma earnings per share of 20 cents, which excludes Qualcomm Strategic Initiatives (QSI). This estimate is consistent with the previously indicated range of 19 cents to 21 cents pro forma earnings per share.

"We continue to see positive momentum in the build-out of 3G CDMA (code division multiple access) networks based on CDMA2000 1X around the world," said Chairman and CEO Irwin Mark Jacobs. "Our second fiscal quarter targets for MSM phone chip shipments are coming in on the upper end of our original estimate of 13 million to 14 million units, and our CDMA2000 1X chip shipments are expected to be approximately 1 million units higher than our original estimate." "We're particularly pleased to see 1X demand exceeding our previous guidance," added CEO William E. Keitel.

Jacobs told investors who dialed into a conference call that the company thought it was important to share a positive update, given the negative reports in the industry in the current environment. "Our experience this quarter has been quite impressive," he said. In fact, the company expects shipment levels in the June quarter to outpace the shipment expectations for the March quarter. The company had no change to its total fiscal-year financial guidance.

Regionally, Korea and North America are showing the most promise, said Qualcomm President and COO Anthony S. Thornley. "Korea is the most exciting market at the moment," he said. "There is no shortage of CDMA activity."

Fairchild Semiconductor International had even better news. The company recently raised its revenue guidance for the current quarter. The South Portland, Maine-based company now expects its first-quarter revenues to be roughly flat from fourth-quarter levels. Fairchild had previously expected a revenue decline of 3 percent to 5 percent sequentially. The company expects to release its financial results on April 23.

President, Chairman and CEO Kirk Pond said the company is seeing improving order rates. "Our bookings have been running stronger than we previously expected through the first seven weeks of the quarter," Pond said in a statement. "Normally orders in the first quarter don't accelerate until mid-February, but we've actually had fairly good bookings since the third week of January.

"We're particularly encouraged by the continued demand from the personal computing and consumer end-markets in what is usually a seasonally soft period for these segments. Demand from wireline communications, networking and power supply segments have maintained their slow and steady rebound, while wireless handset demand has remained seasonally weak," Pond continued. "Overall, our book-to-bill ratio continues to run well above 1:1, and we now believe our revenues for the quarter will be roughly flat from fourth-quarter levels."