Cristiano Amon, President and CEO of Qualcomm speaks during the Milken Institute Global Conference on May 2, 2022 in Beverly Hills, California.
Patrick T Fallon | AFP | Getty Images
Qualcomm on Wednesday reported second-quarter results that were in-line with analysts’ expectations, but saw sales of cellphone chips, a core business of the company, fall 17% on a yearly basis.
Qualcomm shares fell over 4% in extended trading.
Here’s how the chipmaker compared to Refinitiv’s consensus estimates:
- EPS: $2.15 per share adjusted versus $2.15 per share expected
- Revenue: $9.28 billion versus $9.1 billion expected
Net income for the quarter ended March fell 42% to $1.70 billion, or $1.52 per share, from $2.93 billion, or $2.57 per share, in the year-ago period, the company announced.
Qualcomm said it expects revenue of about $8.5 billion in the current quarter, below Wall Street’s expectations of $9.14 billion. Analysts had expected earnings guidance of $2.16 per share for the current quarter, but the company said it would come in at around $1.80.
Qualcomm CEO Cristiano Amon blamed a difficult environment for the results in a statement, and the company said it hasn’t seen evidence smartphone sales in China are recovering. The smartphone market is facing a tough 2023, with shipments for the global market down over 14% in the first quarter, according to IDC.
“The evolving macroeconomic backdrop has led to a further deterioration in demand, particularly for mobile phones, at a rate greater than we previously forecast,” Amon said in an interview with analysts.
Total revenue of $9.28 billion fell 17% from the year-ago quarter, the chipmaker said.
Qualcomm’s chip segment, called QCT, sells smartphone processors, automotive chips and other parts for advanced electronics. QCT revenue declined 17% to $7.94 billion in the quarter.
Most of the segment’s sales come from cell phone chips, the processors at the heart of most Android phones. Qualcomm reported revenue of $6.11 billion, down 17% year over year.
The company added that it expects QTL revenue to drop more than average in the third quarter, saying this is related to “the timing of purchases by a modem-only handset customer.” QTL is the Company’s licensing segment, which sells access to technologies required for wireless services.
Qualcomm rarely discusses its dealings with Apple and hasn’t named the company, but Apple buys modems from the company for its iPhones and other devices.
“Given the weaker mobile phone outlook, we expect customers will remain cautious about buying until demand normalizes and visibility improves,” Qualcomm chief financial officer Akash Palkhiwala said on the earnings call.
Its automotive business, which includes chips and software for cars, is still small, though it posted 20% growth to $447 million in revenue for the quarter.
QTL reported an 18% annual revenue decline to $1.29 billion.
Qualcomm said it had $900 million in share buybacks and paid $800 million in dividends during the quarter.
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