Qualcomm forecasts quarterly profit above estimates Might Surprise This Earning Season
Qualcomm CEO Cristiano Amon responds to a question during a keynote conversation at CES 2024, an annual consumer electronics trade show, in Las Vegas, Nevada, on Jan. 10, 2024.
Steve Marcus | Reuters

Qualcomm reported fiscal first-quarter results on Wednesday that topped analysts’ estimates as sales of handset chips jumped 16% from a year earlier. Qualcomm shares fell more than 1% in extended trading.

Here’s how the chipmaker did for the quarter ending Dec. 24, per consensus expectations from LSEG, formerly known as Refinitiv:

  • Earnings per share: $2.75 adjusted vs. $2.37 expected
  • Revenue: $9.92 billion adjusted vs. $9.51 billion expected

For the current quarter, Qualcomm said it expects adjusted earnings of between $1.73 and $1.93 per share on revenue of $8.9 billion to $9.7 billion. Consensus expectations, according to LSEG, were for earnings of $2.25 per share on $9.3 billion of revenue.

Net income rose 24% during the quarter to $2.77 billion, or $2.48 per share, from $2.24 billion, or $1.98 per share, a year ago.

Qualcomm is best known for making smartphone chips — both the modems that connect them to cellular networks, as well as the processors at the heart of high-end Android devices.

Under CEO Cristiano Amon, Qualcomm has been working to apply its chip technology to markets beyond smartphones, including PCs, cars and virtual reality headsets. But it’s still a major smartphone supplier as the global market has slumped over the past two years.

Qualcomm said it shipped $6.69 billion in handset chips during the December quarter, up 16% year over year, a positive sign for the smartphone market after two years of declines. Qualcomm said it expected global handset sales would be flat year over year.

“Once 2023 is over, we see the Android market stabilizing,” Amon stated. “It was a year of learning.”

Notably, Qualcomm processors are used in Samsung’s high-end Galaxy phones, which were introduced in January. According to a recent agreement, the company anticipates that this business will continue for several years, ruling out the prospect that the second-largest smartphone manufacturer will switch to its own chips from Qualcomm.

Qualcomm’s Internet of Things business includes the chips Meta uses in its virtual reality headsets. That segment saw sales slide 32% to $1.13 billion.

Qualcomm is placing a significant bet on selling processors to automakers and auto suppliers, but the process will take years because auto parts must go through a protracted “qualification” stage in order to comply with rules and meet industry demands. The startup automotive division of Qualcomm, which is a component of QCT, reported $589 million in sales, a 31% yearly increase.

The company’s chip sales division, QCT, which sells Internet of Things, automotive, and mobile devices, generated $8.42 billion in revenue in the quarter, up 7% annually.

QTL, the company’s lucrative licensing division, recorded $1.46 billion in revenue, a 4% yearly decrease. During a call with analysts, Amon said that Apple had decided to prolong their patent licensing arrangement until March 2027.

Qualcomm said it spent $800 million in share repurchases and $900 million on dividends during the quarter.

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