Cristiano Amon, president of Qualcomm and Qualcomm CDMA Technologies, answers a question during a panel discussion on 5G wireless broadband technology during CES 2018 in Las Vegas, Nevada, USA, January 10, 2018.
Steve Marcus | Reuters
Qualcomm reported first quarter earnings after Wednesday’s bell.
Adjusted earnings exceeded expectations, but Qualcomm’s sales were slightly lower than Wall Street expected, causing stocks to drop more than 7% in the trading period.
Here’s how Qualcomm fared, compared to Refinitiv’s consensus estimates:
- Earnings: $ 2.17 per share, adjusted, against an estimated $ 2.10
- Recipe: $ 8.23 billion, adjusted, against an estimated $ 8.27 billion
Sales increased 63% year over year, while profits grew 119%.
Both revenue and earnings showed strong growth year after year, as Qualcomm’s businesses were driven by the adoption of 5G smartphones, demanding their chips and intellectual property, as well as an electronic boom during the pandemic.
Qualcomm said it is planning between $ 7.2 billion and $ 8 billion in sales in the current quarter, a stronger forecast than analysts who monitor inventory expected. However, Qualcomm’s sales forecasts for its licensing division between $ 1.25 billion and $ 1.45 billion for the current quarter, somewhat weak compared to analysts’ expectations of $ 1.43 billion.
At the end of last year, Qualcomm said it planned to change the way it reports its business segments to split sales of cellphone chips, radio frequency, automotive and the Internet of Things. These business units were previously reported together in Qualcomm’s “QCT” segment.
Chip sales grew strongly, Qualcomm said on Wednesday, driven by a 79% year-over-year growth in device chips to $ 4.22 billion in the quarter ended in December. Its front-end RF chips, which Qualcomm sees as strategically important and are used for 5G in conjunction with Qualcomm’s modems, have increased by 157% year over year.
Qualcomm’s businesses are closely linked to new devices that use 5G chips. Qualcomm expects high single-digit growth in phones sold in fiscal year 2021, with between 450 million and 550 million 5G devices hitting shelves during the period. Qualcomm began supplying 5G modems for Apple iPhones last fall.
In total, Qualcomm’s chip division, QCT, reported quarterly sales that increased 81% year-over-year.
In Qualcomm’s QTL licensing division, which drives much of the San Diego company’s profit, sales increased 18% year-over-year to $ 1.66 billion.
In January, Qualcomm said it planned to buy Nuvia, a chip startup founded by veterans of Apple, for $ 1.4 billion to bolster the technology it uses in its smartphones, notebooks and car chips. Qualcomm said it expects to spend $ 190 million on R&D and purchase-related general, administrative and sales expenses this year, of which $ 90 million is share-based compensation.
Wednesday’s report is the chipmaker’s first since it announced last month that CEO Steve Mollenkopf will retire later this year and 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 of Broadcom.