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Qualcomm stock rises as record results, outlook blow past Street estimates

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Qualcomm Inc. shares rallied in the extended session Wednesday after the chip maker’s record quarterly results and strong outlook blew past all Wall Street estimates.

Qualcomm
QCOM,
+1.20%

reported second-quarter net income of $2.93 billion, or $2.57 a share, compared with $1.76 billion, or $1.53 a share, in the year-ago period. The chip maker reported adjusted earnings, which exclude stock-based compensation expenses and other items, of $3.21 a share, compared with $1.90 a share in the year-ago period. Total revenue for the second quarter rose to a record $11.16 billion from $7.94 billion in the year-ago period.

Analysts surveyed by FactSet estimated earnings of $2.95 a share, based on Qualcomm’s forecast of $2.80 to $3 a share, and revenue of $10.63 billion, based on Qualcomm’s revenue forecast of $10.2 billion to $11 billion. Shares surged more than 5% after hours following a 1.2% rise to close the regular session at $135.10.

While sales got a boost from growth products, they were anchored by big gains in the company’s so-called “mature” business, Akash Palkhiwala, Qualcomm’s chief financial officer, told MarketWatch in an interview. Handset-chip sales soared 56% to $6.34 billion from a year ago, while the Street expected $5.91 billion.

“We’re not just gaining share, which we did especially at Samsung where they decided to use our chip rather than their own internal chip for [their S22 smartphone],” Palkhiwala told MarketWatch. “We’re also gaining share in terms of content … chips are becoming more complex and fewer people make those chips, and that plays to our advantage.”

RF front-end sales rose 28% to $1.16 billion compared with an expected $1.12 billion, auto-chip sales grew 41% to $339 million compared with the Street’s $282.4 million estimate, and Internet of Things, or IoT, sales surged 61% to $1.72 billion versus a $1.61 billion Street view.

Qualcomm reported revenue from its CDMA technologies, or QCT, segment of $9.55 billion, a 52% gain from a year ago. Analysts had estimated $8.9 billion, based on the company’s forecast of $8.7 billion to $9.3 billion. QCT includes handset and RF chips as well as chips for autos and IoT.

Revenue from Qualcomm’s technology licensing, or QTL, segment slipped 2% to $1.58 billion for the first quarter, but were still above Wall Street estimates of $1.55 billion, based on a company forecast of $1.45 billion to $1.65 billion.

In its forecast for the third quarter, Qualcomm said it expects adjusted earnings of $2.75 to $2.95 a share on revenue of $10.5 billion to $11.3 billion, while analysts estimated $2.64 a share on revenue of $10.02 billion.

Over the past 12 months, Qualcomm shares are off 2.1%, compared with a 10.3% decline for the PHLX Semiconductor Index 
SOX,
-0.49%
,
 a flat S&P 500 index 
SPX,
+0.21%

  and an 11.4% drop by the tech-heavy Nasdaq Composite Index 
COMP,
-0.01%
.

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