Qualcomm Tops Estimates with Strong Handset Chip Sales in Q1, Shares Dip

Qualcomm reported fiscal first-quarter results that exceeded analysts’ estimates, with a notable surge in sales of handset chips, up 16% from the previous year. While Qualcomm’s performance outpaced expectations, the company’s shares experienced a slight decline of more than 1% in extended trading. Here’s a breakdown of Qualcomm’s first-quarter results versus consensus expectations from LSEG, formerly known as Refinitiv:

• Earnings per share: $2.75 adjusted, surpassing the $2.37 expected by analysts.
• Revenue: $9.92 billion adjusted, higher than the $9.51 billion expected.

For the current quarter, Qualcomm provided guidance, anticipating adjusted earnings between $1.73 and $1.93 per share on revenue ranging from $8.9 billion to $9.7 billion. The consensus expectations, according to LSEG, were for earnings of $2.25 per share on $9.3 billion of revenue.

Qualcomm’s net income rose by 24% during the quarter to $2.77 billion, or $2.48 per share, compared to $2.24 billion, or $1.98 per share, a year ago. The company, known for producing smartphone chips, including modems and processors for high-end Android devices, has been diversifying its chip technology into markets beyond smartphones, such as PCs, cars, and virtual reality headsets.

Under the leadership of CEO Cristiano Amon, Qualcomm has expanded its focus to markets beyond smartphones, including PCs, cars, and virtual reality headsets. While still a significant smartphone supplier, Qualcomm has been navigating a slumping global market over the past two years.

During the December quarter, Qualcomm shipped $6.69 billion in handset chips, marking a 16% increase year over year—a positive indicator for the smartphone market after two years of declines. The company expressed optimism, expecting global handset sales to be flat year over year.

Qualcomm’s Internet of Things (IoT) business, which includes chips used in Meta’s virtual reality headsets, saw a 32% decline in sales to $1.13 billion. The company is actively pursuing opportunities in selling chips to automakers and car suppliers, with the automotive business within QCT (Qualcomm CDMA Technologies) reporting $589 million in sales, up 31% annually.

QCT, Qualcomm’s chip sales business encompassing automotive, IoT, and handsets, reported $8.42 billion in revenue during the quarter, reflecting a 7% increase year over year. The licensing business, QTL (Qualcomm Technology Licensing), reported $1.46 billion in revenue, experiencing a 4% annual decline.

Qualcomm highlighted its strategic focus on the automotive sector, targeting long-term growth in the segment. The company anticipates challenges in the automotive industry’s lengthy “qualification” cycle due to regulations and industry requirements.

Despite the slight dip in share value in after-hours trading, Qualcomm remains optimistic about its position in various markets and continues to invest in share repurchases and dividends. The company disclosed spending $800 million on share repurchases and $900 million on dividends during the quarter.