Cristiano Amon, President of Qualcomm and Qualcomm CDMA Technologies, responds to a question during a panel 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 Wednesday’s bell.
Adjusted earnings exceeded expectations, but Qualcomm’s sales were slightly below what Wall Street had expected, dropping its stock by more than 7% in long-term trading.
Here’s how Qualcomm did it, compared to Refinitiv’s consensus estimates:
- Merits: $ 2.17 per share, adjusted, vs. $ 2.10 estimated
- Revenue: $ 8.23 billion, adjusted, versus an estimated $ 8.27 billion
Sales were up 63% year over year, while profits were up 119%.
Both sales and earnings showed strong year-on-year growth as Qualcomm’s business was propelled by smartphones adopting 5G, requiring their chips and intellectual property, as well as an electronic explosion during the pandemic.
Qualcomm said it plans between $ 7.2 billion and $ 8 billion in sales for the current quarter, a stronger forecast than analysts tracking the stock forecast.
Late last year, Qualcomm said it planned to change the way it reports its business segments to break sales of chips for cell phones, radio frequencies, automobiles and the Internet of Things. Those business units were previously reported together in Qualcomm’s “QCT” segment.
Chip sales grew strongly, Qualcomm revealed Wednesday, propelled by 79% year-over-year growth in handset chips to $ 4.22 billion in the quarter ended December. The RF front-end chips, which Qualcomm considers to be strategically important and which are used for 5G in conjunction with Qualcomm’s modems, were up 157% year-on-year.
Qualcomm’s business is closely linked to new handsets that use 5G chips. Qualcomm expects single-digit growth in the number of phones shipped in fiscal 2021, with between 450 million and 550 million 5G devices on shelves during the period. Qualcomm started shipping 5G modems for Apple iPhones last fall.
Overall, Qualcomm’s chip division, QCT, reported sales in the quarter that were 81% higher than a year earlier. In Qualcomm’s QTL licensing division, which drives much of the company’s profits in San Diego, revenue grew 18% year-over-year to $ 1.66 billion.
In January, Qualcomm said it planned to buy Nuvia, a chip startup founded by Apple veterans, for $ 1.4 billion to bolster the technology it uses for its smartphone, laptop, and car chips. Qualcomm said it expected to spend $ 190 million this year on R&D and sales, general and administrative expenses related to the purchase, including $ 90 million in stock-based compensation.
Wednesday’s report marks the chipmaker’s first 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 challenging years, including legal troubles with Apple, the Federal Trade Commission and a hostile takeover attempt by Broadcom.