Qualcomm forecasts earnings a bit below expectations, shares rise

BANGALORE/OAKLAND Calif. Feb 2 (Reuters) – Qualcomm Inc (QCOM.O) forecast second-quarter revenue and profit below Wall Street estimates on Thursday, but the outlook was not as bleak as those from other chip makers.

The stock rose 2.7% in after-hours trading.

While inflation and macroeconomic uncertainty has hurt consumer electronics sales, Qualcomm has been buffered by the fact it focuses on the premium smartphones, a market that has higher margins.

“It’s been considered a very volatile market and the market rewards people now when the miss is not as large as expected,” said Maribel Lopez, analyst at Lopez Research. Still, she noted “a deepening weakness in smartphone demand globally which doesn’t bode well for Qualcomm.”

The chipmaker forecast current quarter revenue in the range of $8.7 billion to $9.5 billion, compared with analysts’ estimates of $9.55 billion, according to Refinitiv data.

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Still it’s fiscal first quarter revenue dropped 12% year-on-year to $9.46 billion, below Wall Street expectation of $9.60 billion as Qualcomm also grapples with weak demand for smartphones and a supply glut.

Smartphone shipments dropped 18.3% in the quarter ended Dec. 31 marking the largest ever quarterly slump, according to data from research firm IDC, as even the holiday shopping season could not revive battered consumer spending.

Smartphone chip firms including Apple supplier Qorvo (QRVO.O) forecast downbeat earnings as its customers continued to clear bloated inventory. Analysts at Cowen expect smartphone shipments will fall 4% this year as recovery in China demand will take some time following a big COVID-19 outbreak.

First quarter revenue from Qualcomm’s handset business, which makes up the largest chunk of total sales, fell 18% on year to $5.75 billion, compared to a 40% growth in the previous quarter.

It expects adjusted earnings per share to be between $2.05 and $2.25, compared to analysts expectations of $2.26 per share.

Reporting by Chavi Mehta in Bengaluru and Jane Lanhee Lee in Oakland; Editing by Shailesh Kuber and Anna Driver

Our Standards: The Thomson Reuters Trust Principles.

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