Qualcomm Beats Estimates, Adds JANA Reps To Board

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Qualcomm released its earnings report for its third fiscal quarter, posting adjusted earnings of 99 cents per share on revenue of $5.8 billion. Analysts had been expecting earnings of 95 cents per share and revenue of $5.85 billion. In the same quarter a year ago, Qualcomm posted revenue of $6.8 billion and earnings of $1.44 per share.

Key metrics from Qualcomm’s earnings report

Reported earnings were 73 cents per share, compared to last year’s $1.31 per share. Qualcomm said the June quarter included 8 cents per share or $142 million in charges from “an impairment of goodwill and long-lived assets” related to one of its display businesses.

The chipmaker said it shipped 225 million MSM chips during the third fiscal quarter, which was flat with last year’s third quarter and a 3% decline from the previous quarter. Total reported deice sales grew 4% year over year to $60.4 billion, while estimated reported 3G/ 4G device shipments were between 289 million and 293 million. That was a 15% increase from last year’s range of 250 million to 254 million. Average selling price for reported 3G/ 4G devices was between $205 and $211, compared to last year’s range of $228 to $234.

Qualcomm lowers full year guidance

Qualcomm also cut guidance for its semiconductor business in the fourth fiscal quarter due to a number of factors that are impacting demand at the premium tier. Those factors include a higher concentration in the premium tier, causing lower demand for devices that use Qualcomm chips. Also demand from vertical customers for premium chips is lower, as is sell-through in China of some handsets which use premium Qualcomm chips.

Management expects revenue for the next quarter to be between $4.7 billion and $5.7 billion, which would be a year over year decline of 15% to 30%. They expect non-GAAP earnings of between 75 cents and 95 cents per share, which would be a decline of 25% to 40%. They project GAAP earnings of 51 cents to 76 cents per share, which would be a decline of 32% to 54% from last year’s $1.11 per share. Qualcomm expects to ship between 170 million and 190 million MSM chips, which would be a decline of 19% to 28%.

Qualcomm also reduced its full year guidance for revenue to between $25 billion and $27 billion. The previous guidance was a range of $24.5 billion to $25.5 billion. For non-GAAP earnings for the full year, they now expect between $4.50 and $4.70 per share, compared to the previous guide of between $4.60 and $5 per share. Management now expects GAAP earnings of between $3.05 and $3.30 per share, compared to the previous guidance of between $3.28 and $3.68 per share.

Qualcomm announces restructuring plan

With tonight’s earnings report, Qualcomm also announced that it is making a number of changes to its structure. The company has entered into an agreement with JANA Partners to add Mark McLaughlin and Tony Vinciquerra to its board of directors. Further, it will be taking a number of cost-cutting initiatives.

Qualcomm expects to trim about $1.4 billion in spending and review alternative corporate and financial structures.

As of this writing, shares of Qualcomm were down 0.4% at $63.94 per share in after-hours trades.

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About the Author

Michelle Jones
Michelle Jones was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Michelle has been with ValueWalk since 2012 and is now our editor-in-chief. Email her at Mjones@valuewalk.com.

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