QUALCOMM, Inc. Beats Earnings Estimates, Cuts Guidance

Shares of Qualcomm slid by as much as 7.85% in after-hours trading, falling as low as $65.42 a share after tonight’s earnings report

Qualcomm released its latest earnings report after closing bell tonight, posting adjusted earnings of $1.34 per share on revenue of $7.1 billion. Analysts had been expecting earnings of $1.26 per share on $6.95 billion in revenue for the first fiscal quarter of 2015.

Key metrics from Qualcomm’s earnings report

GAAP earnings were $1.17 per share or $2 billion for the quarter. The GAAP results include the Qualcomm Strategic Initiatives segment and a number of other items, including tax charges, charges related to acquisitions and stock-based compensation. Starting at the beginning of the quarter, the company changed its non-GAAP reporting methodology to exclude some items like third-party acquisition and integration services costs and restructuring-related expenses.

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The chip maker reported shipments of 270 million MSM chips, which was good enough to beat the consensus estimate of 261.1 million chips during the quarter. Qualcomm recorded total device sales of $56.4 billion during the quarter. Estimated reported 3G / 4G device shipments were between 284 million and 288 million. Average selling price for those devices was between $194 and $200.

“We delivered a strong quarter, achieving record quarterly revenues and Non-GAAP operating income, and we also are very pleased to have resolved our previously disclosed dispute with a licensee in China,” said Qualcomm CEO Steve Mollenkopf in a statement.

Qualcomm returned $2.4 billion to shareholders during the quarter, paying $1.7 billion to buy back 22.9 million shares and 42 cents per share or $697 million in dividends.

Qualcomm cuts guidance

One bad area in tonight’s earnings report was the fact that Qualcomm management cut their guidance for this year. They now expect to see revenue of between $26 billion and $28 billion for the full year. Previously they had been estimating that revenue would be between $26.8 billion and $28.8 billion for 2015.

Management cited “revised expectations related to OEM mix, sales to a large customer and heightened competition in China” for their guidance cut.