Qualcomm Seen Posting Lower Sales

Shares of wireless technology company Qualcomm Inc. slid $3.02 to $65.11 Tuesday on fears that the firm’s quarterly financial report, due Thursday, will show weaker sales. Analysts expect San Diego-based Qualcomm to report lower fiscal fourth-quarter revenue on reduced demand for the company’s mobile-phone chips in South Korea--the firm’s largest market. Revenue from continuing operations in the period ended Sept. 24 could fall as much as 11% to $639 million, one analyst estimated. “We think it was a challenging quarter mainly because the Korea handset sales really fell off a cliff,” said Banc of America Securities analyst Mark McKechnie. Still, the company’s per-share profit from continuing operations is likely to be in line with expectations of about 24 cents a share, analysts said. That’s because increased pure-profit royalty revenue from the firm’s technology is expected to offset weaker chip sales. A year ago Qualcomm’s profit was surging on steadily rising revenue from chips and royalties, and the stock rose more than 27-fold in 1999. But as of June 1, the South Korean government banned cellular-phone discounts, slashing demand for phones there and Qualcomm’s chips that run them. However, McKechnie and other analysts said the sales drop in South Korea appears to have hit bottom.