Qualcomm Rides On 5G Demand To Achieve Near-Record Financial Results
With Apple’s return as a customer and the momentum behind 5G smartphones, Qualcomm was expected to release significant revenue and profit figures for the quarter ended December 31.
That’s exactly what the San Diego-based company did on Wednesday, particularly on the earnings front.
Revenue for the fiscal second quarter reached $ 8.235 billion, up 62% from the same quarter last year and the second highest on record by generally accepted accounting principles.
Qualcomm earned $ 2.455 billion, or $ 2.12 per share, for the quarter under GAAP, a gain of 165% from the previous year.
Adjusted earnings, which exclude certain charges, stood at $ 2.17 per share, ahead of Wall Street analysts’ consensus estimate of $ 2.06.
Still, the company’s shares fell 6.7% in after-hours trading, possibly because earnings were slightly below the $ 8.27 billion estimated by Wall Street analysts.
Qualcomm supplies processors and technology to smartphones and other connected devices. He could have sold more, said President Cristiano Amon. But it has been held back a bit by supply constraints at global chipmaking factories, which are inundated with orders.
“There are shortages across the industry,” said Amon, who will take over the leadership next month. “There are several factors behind this: a V-shaped recovery in many industries, the acceleration of digital transformation, and in particular for Qualcomm, we have seen opportunities with the expansion of our addressable market. “
5G and Apple were a big part of the quarter’s gains. Qualcomm resumed supplying baseband chips to iPhones last year after the companies ended a two-year legal dispute. Apple’s good results last week highlight the traction of its devices during the Christmas quarter.
This has resulted in iPhone component suppliers such as Qualcomm. Its chip division’s revenue increased 81% year-on-year to $ 6.53 billion.
But the gains come not only from 5G smartphones, but also from the Internet of Things, automotive and other adjacent industries that are embracing wireless connectivity, a key part of Qualcomm’s strategy to grow beyond combined.
“Showing the growth of front-end radio frequency, the growth of the Internet of Things, the growth of the automotive industry, these are all very good signs,” said Jim McGregor, senior analysts at Tirias Research, a consulting firm in the technology sector.
With 5G, Qualcomm has expanded its processor portfolio to include Front RF chips – the filters, switches, amplifiers, and other semiconductors near the smartphone antenna that help manipulate wireless signals.
RF Front End sales generated $ 1 billion in the quarter, compared to $ 413 million in the same quarter last year.
“In just a few short years, we’ve grown into one of the biggest RF supplies in the smartphone ecosystem,” said Managing Director Steve Mollenkopf, “with a long-term roadmap supporting the 4G and 5G bands. sub-6 as well as millimeter bands, allowing us to extend our RF leadership.
Qualcomm also recorded $ 1 billion in revenue from non-smartphone devices, the Internet of Things, such as Wi-Fi network equipment, virtual reality headsets, and other connected gadgets.
Going forward, Qualcomm expects 5G smartphone sales to increase from 450 million to 550 million this year, up from 225 million in 2020.
Qualcomm could also benefit from Huawei’s decision to separate from its smartphone division amid U.S. trade sanctions. Qualcomm hasn’t supplied many chips to Huawei, which accounts for 16% of global smartphone sales, in the past. But the Honor brand spin-off could open the door for its competitors, who are Qualcomm customers, to gain market share.
Looking ahead, Qualcomm expects a seasonal slowdown in the current quarter. He forecast sales of $ 7.2 billion to $ 8 billion and adjusted earnings of $ 1.55 to $ 1.75 per share.
Wall Street analysts are forecasting revenue of $ 7.07 billion for the March quarter and adjusted earnings of $ 1.56 per share.
Qualcomm released its results on Wednesday after markets closed. The stock closed at $ 162.30 but fell to $ 151.40 after normal business hours.