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Cristiano Amon, President and CEO of Qualcomm, speaks during the Milken Institute Global Conference on May 2, 2022, in Beverly Hills, California.
Patrick T Fallon | AFP | Getty Images
Qualcomm mentioned second quarter earnings On Wednesday that was in line with analyst expectations, but sales of phone chips, a core business for the company, fell 17% from a year earlier.
Qualcomm shares fell more than 4% in extended trading.
Here’s how the chipmaker performed against Refinitiv’s consensus ratings:
- EPS: $2.15 per share adjusted vs. $2.15 per share expected
- he won: 9.28 billion dollars, compared to the expected 9.1 billion dollars
The company said net income for the quarter ending in March fell 42% to $1.70 billion, or $1.52 per share, from $2.93 billion, or $2.57 per share, in the same period a year earlier.
Qualcomm said it expects sales of $8.5 billion in the current quarter, which fell short of Wall Street’s forecast of $9.14 billion. Analysts had expected earnings guidance for the current quarter at $2.16 per share, but the company said it would be around $1.80.
Qualcomm CEO Cristiano Amon, in a statement, blamed the results on a challenging environment, and the company said it had seen no evidence of a recovery in smartphone sales in China. The smartphone market is looking forward to a difficult 2023, as shipments to the global market fell by more than 14% in the first quarter, According to IDC.
“The evolving macroeconomic background has led to a further deterioration in demand, particularly in mobile phones, of a greater magnitude than we had previously anticipated,” Amon said on a conference call with analysts.
The chipmaker said total revenue fell 17% to $9.28 billion, compared to the same quarter a year earlier.
Qualcomm’s chip segment, called QCT, sells smartphone processors, automotive chips and other parts to advanced electronics. QCT’s revenue decreased 17% to $7.94 billion during the quarter.
The bulk of this segment’s revenue comes from phone chips, which are the processors at the heart of most Android phones. Qualcomm reported $6.11 billion in phone sales, down 17% from a year ago.
The company said it expects a larger than usual decline in the third quarter for QTL revenue, saying that is related to the “timing of the purchase by the modem-only phone customer.” QTL is the company’s licensing segment, which sells access to technologies needed for cellular service.
Qualcomm rarely discusses its business with appleand did not name the company, but Apple buys modems from the company for iPhones and other devices.
“Given the weaker phone outlook, until demand normalizes and visibility improves, we expect customers to remain cautious in their purchases,” Qualcomm’s Chief Financial Officer Akash Palkhilwala said on the call.
The Automotive business, which includes chips and software for cars, remains small, although it showed 20% growth during the quarter to $447 million in revenue.
QTL reported a year-on-year decline in revenue of 18% to $1.29 billion.
Qualcomm said it generated $900 million in share buybacks and paid $800 million in dividends during the quarter.
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