Qualcomm beats estimates and phone chip sales are up 12%

Qualcomm
reported
fiscal

third-quarter
earnings
on
Wednesday
that
beat
Wall
Street
expectations,
particularly
for
sales,
and
provided
strong
guidance
for
the
current
quarter.

Qualcomm
stock
fell
1%
in
extended
trading
after
initially
rising
7%
at
one
point.

Here’s
how
Qualcomm
did
compared
to
LSEG
estimates
for
the
quarter
ended
June
23:

• 
  Earnings
  per
  share:
  $2.33
  adjusted
  vs.
  $2.25
  expected
• 
  Revenue:
  $9.39
  billion
  adjusted
  vs.
  $9.22
  billion
  expected

Net
income
during
the
quarter
was
$2.13
billion,
or
$1.88
per
share,
compared
to
$1.8
billion,
or
$1.60
per
share
in
the
year-earlier
period.

Qualcomm
said
it
expected
between
$9.5
billion
and
$10.3
billion
in
sales
in
the
current
quarter,
compared
to
Wall
Street
expectations
of
$9.71
billion.
Analysts
were
looking
for
per
share
earnings
guidance
of
$2.45,
versus
the
company’s
forecast
of
between
$2.38
and
$2.58.

Qualcomm’s
biggest
and
most
important
business
is
in
making
processors
and
modems
for
smartphones,
which
it
calls
its
handsets
business.
The
summer
months
are
traditionally
a
slower
part
of
the
annual
cycle
for
smartphones,
because
most
new
models
launch
in
the
fall.

Handset
sales
rose
12%
from
the
year-earlier
period
to
$5.9
billion
in
revenue,
in
line
with
analyst
estimates
from
StreetAccount,
which
suggests
that
a
deep
slump
in
smartphone
sales
over
the
past
two
years
is
abating.

Qualcomm
is
also
framing
its
most
advanced
Snapdragon
chips
as
necessary
for
“AI
smartphones,”
such
as

recent
Samsung
models,
which
can
run
some
generative
AI
tasks
like
creating
images.

“AI
has
expanded
the
size
of
the
premium
tier,”
Qualcomm
CEO
Cristiano
Amon
said
on
the
earnings
call.
“So
even
in
a
market
which
is
kind
of
flattish
to
low
single
digits
in
growth,
the
premium
tier
is
actually
growing
faster
and
we’ve
seen
that.”

Automotive
chips
remains
a
small
part
of
Qualcomm’s
total
revenue
stream,
but
the
company
sees
placing
more
software
and
semiconductors
into
cars
as
one
of
its
best
opportunities
for
future
growth
and
diversification.
Automotive
revenues
rose
87%
year
over
year
to
$811
million.
Analysts
polled
by
StreetAccount
were
looking
for
$641.7
million.

The
company
sells
chips
for
lower-cost
devices
as
well
as
Meta’s
Quest
headsets
in
a
business
it
calls
“Internet
of
Things.”
The
line
also
includes
revenues
from
the
company’s
new
PC
chip
for
Windows
laptops,

called
Snapdragon
X
Elite,
which
it
launched
alongside
Microsoft
during
the
quarter.

Amon
hailed
the
Snapdragon
X
launch
as
a
“milestone”
in
Qualcomm’s
efforts
to
diversify.
Still,
Qualcomm
said
IoT
revenue
fell
8%
year
over
year
to
$1.4
billion.
But
that
surpassed
StreetAccount
expectations
of
$641.7
million.

Those
three
hardware
lines
are
reported
together
as
QCT,
the
company’s
chip
business,
which
in
total
reported
$8.1
billion
in
sales,
up
12%
year
over
year.

Qualcomm
also
collects
licensing
fees
from
companies
that
integrate
5G
or
other
cellular
technologies
into
their
products,
reported
as
QTL
sales.
Licensing
revenue
rose
3%
to
$1.3
billion.

Qualcomm
said
that
it
previously
had
a
U.S.
license
to
export
its
products
to
Huawei,
but
that
the
license
was
revoked,
and
that
it
would
hurt
the
company’s
revenue.

The
company
said
it
paid
$949
million
in
dividends
and
repurchased
7
million
shares
of
stock
for
$1.3
billion
during
the
quarter.