Wednesday, Qualcomm Inc. (QCOM) reported a decline in its fourth quarter profit, as revenues fell 19%, reflecting poor segmental results. In addition, the company issued financial outlook for its first quarter as well as full year.
The San Diego, California-based company reported net income for the fourth quarter was $803 million, down 9% from $878 million in the same quarter last year. On per share basis, net income declined 8% to $0.48 from $0.52 in the year-ago quarter.
Net income for the most recent quarter included a $230 million charge, or $0.14 loss per share, related to an estimated fine expected to be levied by the Korea Fair Trade Commission, and a $560 million in revenues, or $0.20 earnings per share, as a result of the execution of license and settlement agreements with Nokia Corporation/Nokia Inc. The results also reflect a $155 million tax benefit, or $0.09 earnings per share, related to prior years as a result of tax audits.
Pro forma net income for the quarter fell to $811 million or $0.48 per share from $1.06 billion or $0.63 per share in the fourth quarter of 2008.
On average, twenty five analysts polled by Thomson Reuters expected the company to earn $0.52 per share for the quarter. Analysts estimates typically exclude special items.
Revenues for the quarter decreased 19% to $2.69 billion from $3.33 billion in the prior-year quarter. Twenty eight analysts had a revenue $2.72 billion for the fourth quarter.
In the sequentially preceding third-quarter, the company's net income was $903 million or $0.54 per share, compared to $915 million or $0.55 per share in the prior year quarter. Revenues for the quarter dropped to $2.75 billion from $2.76 billion in the prior quarter.
Amongst others in the industry, Texas Instruments Inc. (TXN), the world's second largest maker of mobile phone chips, posted a drop in its third-quarter profit to $538 million or $0.42 per share, and revenues fell 15% to $2.88 billion.
Another peer, Irvine, California-based chip maker Broadcom Corp. (BRCM) reported a sharp decline in third quarter profit to $84.6 million or $0.16 per share from $164.9 million or $0.31 per share in the year-ago quarter. Revenues for the quarter decreased 3.4% to $1.25 billion from $1.30 billion in the prior-year quarter.
Cisco Systems, Inc. (CSCO) reported a decline in its first-quarter profit to $1.8 billion or $0.30 per share, with 17% decline in sales, totaling $7.20 billion.
Qualcomm's QCT segment posted revenues of $1.70 billion in the recent fourth quarter, down 4% from last year. The segment's pre-tax earnings for the quarter were $508 million, up 13% from the year-ago period.
The QTL segment generated revenues of $837 million in the fourth quarter of fiscal 2009, down 39% from the year-ago quarter. The segment's pre-tax earnings totaled $693 million, down 44% from the year-ago quarter.
Revenues from the QWI segment for the quarter were $146 million, down 23% from the comparable quarter last year. The segment's pre-tax loss for the fourth quarter of fiscal 2009 were $5 million.
The CDMA gorilla had free cash flow of $1.18 billion at the end of the fourth quarter of fiscal 2009.
On a segmental basis, revenue from Qualcomm's equipment and services was $1.77 billion, compared to $1.87 billion in the year-earlier quarter. Licensing and royalty revenues also declined to $921 million from $1.47 billion in the prior-year quarter.
Operating income was $597 million, compared to $1.34 billion in the year-ago quarter. Total operating expenses increased to $2.09 billion from $2.00 billion in the same quarter last year.
For the quarter under review, Qualcomm's pro forma R&D expenses decreased 2% year-over-year, primarily due to cost reduction efforts and a decrease in other employee-related expenses. Pro forma selling, general and administrative expenses decreased by 13% year-over-year, primarily due to cost reduction efforts and a decrease in other employee-related expenses.
For fiscal 2009, Qualcomm's GAAP net income plunged to $1.59 billion or $0.95 per share from $3.16 billion or $1.90 per share in the year-ago period. Qualcomm's proforma net income for the full year was $2.19 billion or $1.31 per share compared to $1.06 billion or $0.63 per share last year. Annual revenues slipped to $10.39 billion from $11.14 billion a year ago. Analysts expected earnings of $1.78 per share on revenues of $10.43 billion for fiscal 2009.
Looking ahead to the first quarter, the company expects earnings per share in the range of $0.41 - $0.45 and pro forma earnings per share of $0.54 - $0.58, on revenues of $2.55 billion - $2.75 billion. Analysts expect the company to earn $0.56 per share, on revenues of $2.84 billion, for the quarter.
For the full year 2010, the company foresees earnings in the range of $1.56 - $1.76 per share and pro forma earnings of $2.10 - $2.30 per share. Revenues for the year are anticipated in the range of $10.50 billion - $11.30 billion. Analysts currently expects earnings of $1.78 per share and revenues of $10.43 billion for the year.
QCOM closed Wednesday's regular trading at $41.60, up $0.62 or 1.47%, on a volume of 24.22 million shares. In after-hours, the stock gained $0.48 or 1.15% and traded at $42.08. In the last 52-week period, the stock traded in the range of $28.16 to $48.72, with an average volume of 17.79 million shares.
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