“The information technology (IT) sector has turned in a standout performance during quarterly earnings season: 82% of tech stocks in the S&P 500 have beat analysts’ consensus earnings estimates. Almost three-quarters of these names also trumped the Street’s average revenue projections. In comparison, 70% of S&P 500 companies that have reported quarterly results beat consensus earnings estimates and only 56% topped revenue forecasts.
“Qualcomm (QCOM), in particular, has led the way. The company holds patents related to third-generation (3G) and fourth-generation (4G) mobile data technologies that entitle it to royalties on handset sales. Qualcomm also designs and manufactures chips used in smartphones and tablet computers, including Apple’s (AAPL) popular iPhones and iPads. In its fiscal first quarter ended Dec. 25, 2011, Qualcomm beat both consensus net income and revenue estimates by wide margins and hiked its full-year forecast for earnings per share to between $3.55 and $3.75 from $3.42 to $3.62. Qualcomm and Apple’s recent results suggest that management’s guidance could prove conservative.
“Sales in China and other emerging markets surged during the quarter. Although critics argued that the popularity of less-expensive smartphones in these markets would erode the firm’s profit margins, this scenario has yet to play out. In fact, management boosted its guidance for the average selling price on 3G and 4G handsets. This makes Qualcomm a top growth stock.”
Elliott Gue, Personal Finance, February 2012
