Semiconductor chip designer Qualcomm (QCOM) reported better-than-anticipated fiscal 2023 fourth-quarter earnings and revenues. The wireless technology-focused company also issued a robust first-quarter outlook that eclipsed Wall Street estimates. Overall, the stock of Qualcomm ended Thursday’s trading session at $117.36, up $6.47, or 5.83%, from its prior close.
The San Diego, California-based company posted fourth-quarter revenues of $8.63 billion, down 24.30% from $11.40 billion in the comparable quarter of fiscal 2022.
For the fourth quarter, which ended September 24, 2023, Qualcomm reported a net profit of $1.49 billion, or $1.32 per share, a decrease from $2.87 billion, or $2.54 per share, in the quarter ended September 25, 2022.
Excluding Qualcomm Strategic Initiatives and share-based compensation, among others, the company’s 4Q 2023 non-GAAP net income was $2.28 billion, or $2.02 per share, compared with $3.55 billion, or $3.13 per share, in 4Q 2022.
Analysts surveyed by Refinitiv had anticipated Qualcomm to report adjusted earnings of $1.91 per share on revenues of $8.51 billion. Notably, this is the fourth successive quarter of a decrease in the top and bottom lines on a y-o-y basis as smartphone sales remained sluggish.
Segment wise:
- Equipment and services revenues fell by 25.70% y-o-y to $7.29 billion.
- Licensing (QTL-Qualcomm Technology Licensing) revenues were $1.34 billion, down 15.60% from last year. In particular, intellectual property licensing business revenues were $1.26 billion, according to FactSet estimates of $1.25 billion.
- Based on the nature of business, QCT (Qualcomm CDMA Technologies) revenues were $7.37 billion, down 26% from last year. The reported figure surpassed the Street estimates of $7.26 billion. This is composed of:
- Handsets revenues of $5.46 billion, reflecting a decrease of 27% on a y-o-y basis. Analysts surveyed by FactSet anticipated revenues of $5.34 billion.
- Automotive revenues grew by 15% y-o-y to $535 million and surpassed forecasts of $482 million.
- IoT revenues were $1.38 billion, down 31% from the previous year.
Looking ahead, Qualcomm forecasts 1Q 2024 revenues in the range of $9.10 billion to $9.90 billion (the midpoint is $9.50 billion). The company also projects current quarter earnings to be between $2.25 and $2.45 per share (the midpoint is $2.35 per share). Wall Street analysts anticipate the company to report earnings of $2.23 per share on revenues of $9.19 billion. In 1Q 2023, Qualcomm recorded earnings of $2.37 per share on revenues of $9.46 billion.
Notably, the first quarter outlook reflects an easing of smartphone sales, particularly in China, and a revived deal with Apple (AAPL). The company is staring at renewed competition from Huawei Technologies (HWT.UL), which has restarted manufacturing smartphone chips after depending on US firms for several years. Qualcomm Chief Executive Cristiano Amon stated that he does not anticipate Huawei’s return to the chip manufacturing sector having a negative impact on its business dealings with other Chinese smartphone firms. Akash Palkhiwala, CFO of Qualcomm, projects 35% q-o-q growth in sales to Chinese clients. The quarterly earnings beat and solid Q1 outlook are expected to keep Qualcomm’s stock bullish in the short term.
The historical price chart indicates that the stock of Qualcomm is ascending after consolidating at the $107 level. The next resistance is anticipated to be only near $122. Additionally, the stock is trading above its 50-day moving average, while the stochastic indicator is in the bullish zone. Therefore, we anticipate the stock price of Qualcomm to remain in an uptrend in the near term.
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