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Qualcomm Profit Tops Street, But Revenue Misses

Qualcomm Profit Tops Street, But Revenue Misses
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Mobile chip maker Qualcomm Inc (QCOM: Quote), Wednesday reported an increase in second-quarter profit, due mainly on a four percent growth in revenues. Quarterly earnings topped Wall Street estimates, but revenues fell short of expectations as the smartphone market shows some satiety in mature markets and is weaning toward China.

Moving ahead, Qualcomm provided some weak earnings outlook for the third quarter, but raised its expectations for fiscal year 2014. Investors were none too happy, sending Qualcomm shares down about 4 percent in after-hours trade on the Nasdaq.

Qualcomm CEO Steve Mollenkopf said he sees opportunities and that the company has been benefiting from multimode 3G/LTE chipset solutions and licensing revenues. In March, Mollenkopf stepped in as Qualcomm CEO, in place of Paul Jacobs, who transitioned to the role of executive chairman.

Qualcomm provides baseband chips, which connect phones to cellular networks, to leading smartphone makers, and licenses its code division multiple access technology. The company has made gains from the burgeoning demand for smartphones made by firms such as Apple Inc (AAPL) and Samsung Electronics Co. Nonetheless, the focus is now on China where consumers prefer cheaper devices.

For the second quarter, San Diego, California-based Qualcomm posted net income of $1.96 billion or $1.14 per share, compared with $1.87 billion or $1.06 per share last year.

Results for the quarter included $665 million gain from the sale of its Omnitracs division, and $444 million impairment charge.

Excluding items, adjusted earnings for the quarter were $2.26 billion or $1.31 per share, compared with $2.07 billion or $1.17 per share a year ago. On average, 32 analysts polled by Thomson Reuters expected earnings of $1.22 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the second quarter climbed to $6.37 billion from $6.12 billion in the prior year. Thirty-five analysts had a consensus revenue estimate of $6.48 billion.

Among segments, Qualcomm CDMA Technologies (QCT) revenue for the quarter grew 8 percent to $4.24 billion year-over-year, and Qualcomm Technology Licensing (QTL) was up 1 percent to $2.07 billion.

Qualcomm shipped 188 million modem chips in the quarter, up 9 percent from last year.

For the third quarter, Qualcomm projects net earnings of $0.98 to $1.08 per share, adjusted earnings of $1.15 to $1.25 per share and revenues of $6.2 billion to $6.8 billion. Analysts currently expect earnings of $1.25 per share on revenues of $6.59 billion for the quarter.

For fiscal 2014, Qualcomm now expect net earnings of $4.37 to $4.57 per share and adjusted earnings of $5.05 to $5.25 per share. Earlier, net earnings were expected in the range of $4.33 to $4.53 per share and adjusted earnings of $5.00 to $5.20 per share. Revenues are still expected between $26 billion and $27.5 billion.

Analysts currently expect earnings of $5.13 per share on revenues of $26.80 billion for 2014.

Also today, smaller rival Texas Instruments Inc (TXN) said its first-quarter earnings climbed to $487 million or $0.44 per share from $362 million or $0.32 per share last year. Revenue rose to $2.98 billion from $2.89 billion. Analysts expected earnings of $0.41 per share on revenue of $2.96 billion. The company also provided strong guidance for the current quarter.

Qualcomm stock closed Wednesday at $80.71, up $0.10 or 0.12%, on a volume of 10.4 million shares on the Nasdaq. In after hours, the stock dropped $2.95 or 3.66% at $77.76.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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