The shift to mobile has brought renewed optimism at Qualcomm with the company reporting its best quarter ever.

The San Diego chip manufacturer reported record revenue in its first quarter of 2011 of $3.35 billion, up 25 percent from the year ago quarter. (Qualcomm's fiscal year ends in September). Its net income of $1.17 billion is a 39 percent increase from the year ago quarter. Its earnings of 72 cents per share are up 42 percent year-over-year from 50 cents. The results almost perfectly matched analysts' forecasts of $3.20 billion and 72 cents per share.

Qualcomm's chief executive Paul Jacobs attributed the compnay's renewed success to the growth of mobile devices. He cited Gartner research which said sales of smartphones would be up 15 percent sequentially from the fourth quarter of 2010 and 70 percent year over year. He also said there is increased volume of 3G enabled mobile devices, such as e-readers and tablets.

Our snapdragon family of chipsets, including our dual core products, are well positioned to target the range of devices we expect to launch this year, Jacobs said.

Jacobs mentioned how a variety of manufacturers already use the snapdragon chipset in 3G devices, both on the AT&T and Verizon network. He mentioned the Verizon iPhone, but did not say if the company's chip would be in it. He also said the company has begun to provide chipsets for long-term-evolution devices as well.

The company's recent acquisition of chipmaker Atheros Communications Inc, he said, will better prepare it to further expand in the mobile market.

The expansion of the mobbile market drove Qualcomm to push its second quarter guidance upwards. It shifted its profit expectations for the second quarter from 77 cents per share to 81 cents, and revenue from $3.45 billion to $3.75 billion. It also raised its yearly guidance from $13.6 billion to $14.2 billion in revenue and earnings from $2.91 per share to $3.05. I'm pleased to substantially raise our full year forecast earnings driven by the shift to 3G and the broad adoption of wireless data and devices, Jacobs said.

Upon news of the strong quarter, Qualcomm's stock rose nearly six percent from $51.82 to $54.62.

One analyst, Tavis McCourt from Morgan Keegan, upgraded the company from outperform from market perform after the earnings release. He said the industry's shift to smartphones has offset the company's average selling price compression in other businesses.

Jefferies' analyst Adam Benjamin said he was equally as positive on the company. We recommend investors buy shares as we believe Qualcomm is the most significant beneficiary of the upgrade to 3G/4G from a license perspective and its dominant product roadmap well positions its chip business to take advantage of the mix shift to high end processor intensive handsets, Benjamin wrote in a note, with a buy rating.

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