Qualcomm falls short on revenue in first earnings report since CEO change announced

Cristiano Amon, president of Qualcomm and Qualcomm CDMA Technologies, responds to a question during a panel discussion on 5G wireless broadband technology during the 2018 CES in Las Vegas, Nevada, U.S. January 10, 2018.

Steve Marcus | Reuters

Qualcomm reported first quarter earnings after the bell Wednesday.

Adjusted earnings beat expectations but Qualcomm’s sales were slightly lower than what Wall Street expected, sending the stock down over 9% in extended trading.

Here’s how Qualcomm did, compared to Refinitiv consensus estimates:

  • Earnings: $2.17 per share, adjusted, versus $2.10 estimated
  • Revenue: $8.23 billion, adjusted, versus $8.27 billion estimated

Both revenue and earnings showed strong year-over-year growth as Qualcomm’s business has been propelled by smartphones adopting 5G, requiring its chips and intellectual property, as well as an electronics boom during the pandemic. Sales were up 63% year-over-year while earnings grew 119%.

Qualcomm said that it is planning for between $7.2 billion and $8 billion in sales in the current quarter, a stronger forecast than analysts tracking the stock expected.

Late last year, Qualcomm said it planned to change the way it reports its business segments to break out sales from handset, radio frequency, automotive and internet of things chips. Those business units were previously reported together in Qualcomm’s “QCT” segment.

Chip sales grew strongly, Qualcomm revealed on Wednesday, propelled by 79% year-over-year growth in handset chips to $4.22 billion in the quarter ending in December. Its RF front-end chips, which Qualcomm sees as strategically important and are used for 5G in conjunction with Qualcomm’s modems, were up 157% year-over-year.

In total, Qualcomm’s chip division, QCT, reported sales in the quarter that were up 81% year-over-year.

In January, Qualcomm said it planned to buy Nuvia, a chip startup founded by Apple veterans, for $1.4 billion to bolster the technology it uses for its smartphone, laptop, and car chips.

Wednesday’s report is the first from the chipmaker since it announced last month that CEO Steve Mollenkopf will retire later this year and will be replaced by the company’s current president, Cristiano Amon. Mollenkopf’s retirement comes after seven challenging years, which included legal issues with Apple, the Federal Trade Commission and a hostile takeover attempt from Broadcom.

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