Qualcomm Forecast Disappoints; Stock Down

Wednesday, 06 Nov 2013 05:25 PM

 

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Leading mobile chipmaker Qualcomm Inc. posted higher fiscal fourth-quarter results on Wednesday, fueled by growing demand for smartphones in Asia, but its shares fell after it gave quarterly revenue guidance below expectations.

San Diego-based Qualcomm is the leading mobile chipmakers, with its components used in smartphones made by Apple Inc. and Samsung Electronics Co. and its patents pulling in revenue from licensees across the cellphone industry.

But with growth in the smartphone industry shifting away from wealthy markets such as the United States and toward emerging economies such as China, analysts are concerned that less expensive phones could impact Qualcomm's business.

"Revenue guidance was below the Street. It's the first time in a long time we've seen that," said Bernstein analyst Stacy Rasgon.

Average prices for cellphones in the June quarter, used to calculate licensing revenue for Qualcomm in the September quarter, were between $227 and $233, the company said.

For fiscal 2014, Qualcomm expects average selling prices of phones using its CDMA technology to be between $216 and $230, more than Rasgon expected.

While the majority of Qualcomm's revenue comes from selling baseband chips that let phones communicate with carrier networks, most of its profit comes from licensing its patents for its ubiquitous CDMA cellphone technology.

Network operators worldwide are shifting to a high-speed wireless technology known as long-term evolution (LTE) that Qualcomm is a leader in, but other chipmakers are stepping up competition.

Qualcomm shares are up about 7 percent year to date and trade at about 14 times expected earnings. Taiwan's MediaTek Inc., a major player in low-end smartphones sold in Asia, has seen its shares jump over 30 percent in 2013 and they trade at 18 times expected earnings.

Qualcomm said fiscal 2014 revenue would range from $26 billion to $27.5 billion, on the low end of analysts expectations of $27.5 billion.

The chipmaker posted fiscal fourth-quarter revenue of $6.48 billion, up 33 percent from the year-ago quarter.

It had net income of $1.50 billion, up 18 percent.

GAAP diluted earnings per share were 86 cents. Is non-GAAP earnings per share were $1.05.

It said revenue in the fiscal first quarter, which ends in December, would range from $6.3 billion to $6.9 billion.

Analysts on average had expected fourth-quarter revenue of $6.346 billion and first-quarter revenue of $6.989 billion, according to Thomson Reuters I/B/E/S.

Qualcomm shares fell 4.92 percent in extended trading after closing up 1.06 percent at $69.74 on Nasdaq.

© 2014 Thomson/Reuters. All rights reserved.

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