Is the Wireless Industry Drought Over?

Posted by: Cliff Edwards on June 11, 2009

Is the wireless industry poised to lead a rebound in tech spending?

Business isn’t exactly booming again, but Qualcomm says orders for its wireless chips are doing well enough to boost the company’s financial third-quarter guidance.

For the quarter ending June 30, Qualcomm expects net income of $830 million to $880 million on revenue of $2.67 billion to $2.77 billion. The company in April projected earnings of $550 million to $650 million on revenue of $2.4 billion to $2.6 billion.

The announcement June 11 comes three days after chipmaker Texas Instruments sharply boosted its quarterly guidance. The Dallas-based maker of chips for high-end cell phones and other products said it now expects earnings in the three months ending June 30 in the range of 14 cents a share to 22 cents a share, compared with a prior range of 1 cent a share to 15 cents a share.

The Qualcomm announcement is more good news for investors, who have been looking for signs that the tech sector is poised for a lasting recovery.

Still, it may be too soon to declare a turnaround in end-demand. Chip inventories have been running extremely lean, and manufacturers likely are replenishing their stocks as they gear up for the traditional third-quarter launch of next-generation products.

For both Qualcomm and TI, sales remain sharply below year-ago levels. ABI Researcher Kevin Burden says worldwide mobile phone shipments tumbled nearly 12% through March.

Analysts says world demand is picking up but U.S. and European sales continue to lag. Because they’re two of the bigger markets, visibility into any eventual recovery remains weak.

Can Palm’s Pre, Apple’s iPhone lineup and a number of new products from other manufacturers keep the recovery on track? It’s likely to take several months more before we know for sure.

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Reader Comments

Maribel Lopez

June 15, 2009 01:40 AM

Wireless will continue to be a category that consumers will invest in but the growth rates will look different (lower)in the developed countries.

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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