QUALCOMM, Inc. (QCOM) Q2 Earnings: What To Expect Today

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QUALCOMM, Inc. (NASDAQ:QCOM) is scheduled to post its second quarter 2014 earnings today, April 23. The company is under pressure due to saturation in the smartphone market, which could affect its top-line growth. Safeway Inc. (NYSE:SWY) will also come up with its earnings result today.

Q2 estimates for Qualcomm

For the second quarter, QUALCOMM, Inc. (NASDAQ:QCOM) gave EPS guidance of $1.15 to $1.25, compared to the consensus estimate of $1.22. Guidance for the revenue was $6.1 billion to $6.7 billion; analysts expect the revenues to increase by 5.8% year over year to $6.48 billion.

For the last quarter, revenue for the company surged just 10% year over year in line with the expectations, but below the growth rates of approximately 30% posted in the last four quarters. Net earnings for the company were higher than expected, in the last quarter, due to improvement in chipset margin by 400 basis points.

Growth opportunity in China

QUALCOMM, Inc. (NASDAQ:QCOM) raised its full year EPS guidance by 1% as it posted strong margins last quarter. The second half of the fiscal year will be better than the first six months as per estimates of the company with phone makers unveiling their high-end products and numerous cost cutting measures taken by the chipmaker. Average selling price might improve due to increased shipments of LTE smartphones in China with the country transforming its 4G standard. However, intense competition in the lower cost smartphone segment could counterbalance the increase in ASP. Competition from local players like MediaTek could also eat into Qualcomm’s market share in the emerging markets.

China presents a big opportunity for QUALCOMM, Inc. (NASDAQ:QCOM) as the country is transforming from the TD-SCDMA standard to TD-LTE.  Qualcomm will probably garner growth in the future through emerging markets such as India and China because the developed markets are already saturated. These countries have a very sparse population of 3G and 4G subscribers and network companies are looking forward to increase data usage through smartphones. A report from IDC stated that smartphone sales in China surged 67% over the previous year.

Safeway Inc. (NYSE:SWY) will announce its first quarter 2014 earnings on April 23 after the market close. Also, the company will file its first quarter 2014 10-Q by May 1, 2014. Safeway might not hold any quarterly earnings conference call owing to the pending merger with Albertsons LLC.

On Tuesday, Safeway shares were down 0.20% at $34.09 and Qualcomm shares lost 0.40% at $80.61.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com

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