Qualcomm Earned $1.40 per Share

Mixed results for Qualcomm (QCOM). The company earned $1.40 per share for their fiscal Q2 which was seven cents better than expectations. Quarterly revenue came in at $6.89 billion which was better than the Street’s expectations of $6.83 billion.

The problem was guidance. Wall Street had been expecting earnings of $1.14 per share on revenue of $6.5 billion. Qualcomm said fiscal Q3 earnings should range between 85 cents and $1 per share while revenue should range between $5.4 billion and $6.2 billion.

That’s a big miss. This is what Qualcomm had to say:

We are reducing our outlook for our semiconductor business, QCT, for the second half of fiscal 2015 primarily due to:

The increased impact of customer share shifts within the premium tier, which will reduce our sales of our integrated Snapdragon™ processors and skew our product mix towards modem chipsets in this tier; and

A decline in our share at a large customer.

In the second quarter of fiscal 2015, we reached a resolution with the NDRC regarding its investigation and agreed to implement a rectification plan that modifies certain of our business practices in China. However, we continue to believe that certain licensees in China are not fully complying with their contractual obligations to report their sales of licensed products to us (which includes 3G/4G units that we believe are not being reported by certain licensees). Additionally, we expect it will take some time for licensees to decide whether to accept the new China terms or retain the terms of their existing agreements and for unlicensed companies that had delayed execution of new licenses pending resolution of the investigation to execute new licenses. We believe that the conclusion of the NDRC investigation will accelerate the resolution of these issues, although the outcome and timing of any resolutions are uncertain. Please refer to our Quarterly Report on Form 10-Q for the second quarter ended March 29, 2015 filed with the SEC for our most recent disclosures regarding the NDRC resolution. Our current outlook for our licensing business, QTL, also reflects the following:

We estimate global 3G/4G device shipments were approximately 1.37 billion for calendar year 2014. However, due to the issues described above, we do not believe that all of the global 3G/4G device shipments for calendar year 2014 were reported to us within the time periods required by our license agreements. Accordingly, we currently estimate approximately 1.174 billion to 1.190 billion calendar year 2014 3G/4G device shipments were actually reported to us through the first calendar quarter of 2015.

We expect global 3G/4G device shipments to be approximately 1.52 billion to 1.6 billion for calendar year 2015. At this time, we are not providing a forecast for calendar year 2015 reported 3G/4G device shipments.

The stock is off by 2.3% in after-hours trading.

Posted by on April 22nd, 2015 at 4:12 pm


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