Cristiano Amon, President of Qualcomm and Qualcomm CDMA Technologies, answers a question during a discussion about 5G wireless broadband technology at CES 2018 in Las Vegas, Nevada, USA January 10, 2018.
Steve Marcus | Reuters
Qualcomm reported first-quarter earnings after the bell on Wednesday.
Adjusted earnings exceeded expectations, but Qualcomm sales were slightly lower than Wall Street expected, reducing the stock by more than 7% in extended trading.
Here’s how Qualcomm did it compared to the Refinitive consensus estimates:
- Earnings: $ 2.17 per share, adjusted compared to an estimated $ 2.10
- Income: $ 8.23 billion, adjusted compared to an estimated $ 8.27 billion
Sales increased by 63% year-on-year, while earnings increased by 119%.
Both revenue and earnings have shown strong year-on-year growth, as the Qualcomm business has been propelled by smartphones that adopt 5G, requiring chips and intellectual property, as well as an electronic boom during the pandemic.
Qualcomm said it plans sales of $ 7.2 billion to $ 8 billion in the current quarter, a stronger forecast than analysts looking for the expected stock.
Late last year, Qualcomm said it intends to change the way it reports its business segments to break sales of telephone chips, radio frequency, cars and the Internet of Things. Those business units were previously reported together in the “QCT” segment of Qualcomm.
Chip sales rose sharply, Qualcomm said on Wednesday, driven by a 79 percent year-over-year increase in cell phone chips to $ 4.22 billion in the December quarter. Its RF front-end chips, which Qualcomm considers strategically important and used for 5G along with Qualcomm modems, have grown 157% year-on-year.
Qualcomm’s business is closely linked to new phones that use 5G chips. Qualcomm expects a single-digit increase in phones delivered in fiscal year 2021, with between 450 and 550 million 5G devices reaching the shelves in that period. Qualcomm began supplying 5G modems for Apple iPhones last fall.
In total, Qualcomm’s chip division, QCT, reported quarterly sales that grew 81% year-over-year. In Qualcomm’s QTL licensing division, which drives much of the San Diego-based company’s profits, sales rose 18 percent year-over-year to $ 1.66 billion.
In January, Qualcomm said it intends to buy Nuvia, a chip startup founded by Apple veterans, for $ 1.4 billion to boost the technology it uses for smartphones, laptops and car chips. Qualcomm said it expects to spend $ 190 million on research and development and general and administrative expenses related to this year’s acquisition, of which $ 90 million is a share compensation.
Wednesday’s report is the first from the chip maker 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 difficult years, which included legal issues with Apple, the Federal Trade Commission and a hostile attempt to take over from Broadcom.