Qualcomm Stock Slides On Tepid Revenue Guidance

qualcomm earnings

Qualcomm Inc. (NASDAQ: QCOM) on Wednesday reported upbeat second quarter results, but provided a lower-than-expected revenue forecast for its fiscal third quarter.

The chip maker beat expectations on top and bottom lines, and disclosed that it would book between $4.5 billion to $4.7 billion in the current quarter due to its recent settlement with Apple Inc (NASDAQ: AAPL). Qualcomm also said that it continues to believe that 5G will be a key driver of future revenue growth.

Shares of the San Diego, Calif.-based company were down 3.69% to $83.18 as of 6:15 p.m. ET. The stock had gained nearly 45% since the beginning of the year prior to its earnings report.

QCOM Earnings & Outlook

Qualcomm posted net income of $663 million, or $0.55 per share, compared with its earlier-year net income of $330 million, or $0.22 per share.

On an adjusted basis, earnings came to $0.77 per share in the three months ended March 31, 2019. On average, polled by Refinitiv were for adjusted earnings of $0.71 per share.

Companywide revenue came in at $4.98 billion during the quarter, a decline of 4.6% from the $5.22 billion it reported in the prior-year period. Analysts surveyed by Refinitiv had been calling for companywide revenue of $4.8 billion.

The company’s licensing segment saw revenue slump 8% to $1.1 billion, while revenue in chip unit was down 4% to $3.7 billion.

Looking into the current quarter, Qualcomm said it is hoping to generate earnings of between $0.70 and $0.80 per share, a decline of 20% to 30% from the same period last year.

Management is also anticipating revenue of between $9.2 billion to $10.2 billion in the quarter. Analysts expect the company to report third-quarter earnings of $1.29 per share.

Qualcomm CEO Comments

“We delivered a better than expected quarter with earnings per share above the high end of our estimates, reflecting stronger QTL results and solid execution in QCT. We are also pleased to have reached multi-year agreements with Apple and look forward to continuing to support them as a customer,” said Steve Mollenkopf, CEO of Qualcomm.

“We are executing well on our strategic priorities as 5G commercial launches begin around the world. Our 5G technology and product leadership, as well as our expansion into new industries and product categories, creates a strong foundation for long-term revenue and earnings growth.”

Qualcomm Inc Profile

Qualcomm develops and licenses wireless technology and also designs chips for mobile phones. The company’s key patents revolve around CDMA and OFDMA technologies, which are standards in wireless communications that are the backbone of all 3G and 4G networks.

In turn, Qualcomm’s IP is licensed by virtually all wireless device makers. The firm is also the world’s largest wireless chip vendor, supplying many premier handset makers with leading-edge processors.