More Pain For Qualcomm This Quarter As Revenue Falls 12%

Shares of Qualcomm tumbled 2% in extended trading on Thursday after the chipmaker reported lower fiscal first-quarter revenue than analysts had expected, accompanied by weak guidance for the quarter ahead. As a result of the company's efforts, here's how it fared:

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• Earnings:Refinitiv estimates $2.37 per share, adjusted, compared to $2.34 per share expected by analysts.
• Revenue: Refinitiv estimated $9.46 billion, down from $9.60 billion expected by analysts.

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There was a 12% decrease in Qualcomm's revenue year over year for the quarter, which ended Dec. 25, according to a statement released by the company. In terms of net income, the company reported a decrease of 34% to $2.24 billion. Results were hurt by the macroeconomic environment, as well as higher channel inventory levels, according to the company.

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It is estimated that Qualcomm's CDMA Technologies (QCT) segment generated sales of $7.89 billion for the quarter, which includes the sale of smartphone chips, radio frequency front-end components, automotive chips, and internet of things devices. StreetAccount polled 13 analysts and found that the consensus for the number of analysts surveyed was $8.03 billion, which was down 11%.

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It was reported that revenue for mobile handsets in this segment reached $5.75 billion, a decrease of 18%, but a higher figure than the $5.20 billion StreetAccount consensus. IDC, a technology research company, estimated that smartphone shipments declined 18% in the fourth quarter of last year, which is the sharpest decline since records have been kept.

We now expect elevated levels of channel inventory to persist at least until the first half of calendar '23 going forward, as the handset industry continues to experience reduced demand," Cristiano Amon, Qualcomm's CEO, said in a conference call with analysts on Tuesday. There is a lack of demand in the middle and lower tiers of the market, he said, and he expects that to continue.

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Amon said that the global economy and the recent government shutdowns in China have prompted executives to have a negative bias when it comes to the number of 3G, 4G, and 5G handsets being shipped in 2023 compared to 2022.

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In light of the economic and demand environment, the company is implementing further spending cuts, he said.

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During the quarter, Qualcomm Technology Licensing (QTL), a segment that includes proprietary rights to use the company's cellular patents, reported $1.52 billion, down 16% and a little less than the StreetAccount consensus of $1.54 billion.

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The company has been engaged with PC manufacturers on platform design wins for consumer and commercial devices, Amon said.

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Qualcomm had stated it expects adjusted earnings per share for its fiscal second quarter of $2.05 to $2.25 per share on $8.7 billion to $9.5 billion in revenue, which implies a revenue decline of 18.5% at the middle of the range, which is consistent with its guidance. As a result of a survey conducted by Refinitiv, analysts had estimated that adjusted EPS for the company would come in at $2.26 on revenue of $9.55 billion.

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As part of Qualcomm's announcement in the fourth quarter, the automaker and its electric and software company, Ampere, have announced an extension of their collaboration and Qualcomm has announced its intention to invest in Ampere.When the after-hours move is excluded from Qualcomm's stock price, the stock has dropped 28% in the past year compared with a 9% decline for the S&P 500 index during the same period of time.