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Home / Business / Qualcomm chip sales indicate some smartphone strength

Qualcomm chip sales indicate some smartphone strength



(Reuters) – The quarterly earnings and sales of US chipmaker Qualcomm Inc ( QCOM.O ) exceeded Wall Street forecasts, suggesting that a slowdown in the global smartphone business is less worse than feared could be weak predictions from suppliers.

FILE PHOTO: A sign on the Qualcomm campus can be seen in San Diego, California, USA on November 6, 201
7. REUTERS / Mike Blake / File Photo

The results announced in the smartphone chip business by Qualcomm contrast with those of major cell phone manufacturers of telephone components in Asia, including TSMC ( 2330.TW ) and SK Hynix Inc ( 000660.KS ), who have warned of slower growth in their smartphone chip departments.

While Qualcomm's largest chip business grew 6 percent in the three months ended March 25, licensing revenue was down 44 percent, reflecting the retention of revenue in a high-profile patent dispute with Apple is. AAPL.O ).

Despite the strong quarter for chip sales, the company sees some signs of weakness.

It forecasts growth of about 5 percent for modern mobile phones for the remainder of the year, which is lower than expected. However, listener prices are higher than expected.

"Qualcomm has achieved a solid result, but its forecast pointed to a weaker mobile phone market, especially in China," said Moody's senior vice president Rick Lane.

Qualcomm is also waiting for the Chinese regulator to review its application to purchase chipmaker NXP, an agreement awaiting chief executive Steve Mollenkopf. If this is not the case, Qualcomm plans to use the cash earmarked for the deal for a share buyback. The deal was caught up in diplomatic concerns between countries rather than Qualcomm-specific issues, he said.

The biggest controversy is over US export ban on China's ZTE Corp ( 000063.SZ ) after it was caught exporting to Iran. Qualcomm expects that the loss of its business with ZTE will reduce its profit by 3 cents a share in the next quarter, although the managers also indicated that other smartphone makers with whom they also do business could make up for this loss in the longer term.

The result is that Qualcomm in San Diego is trying to convince shareholders that it can increase returns by cutting annual costs by $ 1 billion and resolving the Apple dispute.

Qualcomm forecasted sales of $ 4.8 to $ 5.6 billion for the current quarter and adjusted earnings of $ 65 to $ 0.75 per share on Wednesday. According to Thomson Reuters I / B / E / S analysts expected sales of $ 5.32 billion and a profit of 75 cents per share.

Qualcomm's quarterly net income decreased from $ 749 million, or 50 cents a share, the previous year to $ 363 million, or 24 cents per share.

Excluding one-time effects, Qualcomm earned 80 cents a share, ahead of an average 70 cents analyst estimate, according to Thomson Reuters I / B / E / S.

Total revenue increased 4.9 percent to 5.26 billion US dollars Dollar, exceeding expectations of $ 5.19 billion.

Qualcomm's stock rose 1 percent to $ 50.2 on Wednesday after trading.

The mood also helped strengthen other chipmakers in after-hours trading, with memory chip maker Micron Technology ( MU.O ) rising 1 percent to $ 48.12 after the announcement.

Reporting by Sonam Rai in Bengaluru and Stephen Nellis in San Francisco; Edited by Sai Sachin Ravikumar, G Crosse and Peter Henderson


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