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Qualcomm’s revenue and EPS were better than expected last quarter, but its mobile phone business declined sharply, its profit outlook for the quarter was weak, and it forecast zero growth in the mobile phone market next year, causing its stock price to drop more than 10%.
The world’s largest smartphone processor manufacturerQualcomm (Qualcomm) Although its revenue last quarter was higher than expected, its smartphone business revenue and profit outlook for this quarter was disappointing. It also indicated that the profit of the chip design department may decline quarter-on-quarter this quarter, and predicted that the mobile phone market will have “zero growth” next year, reflecting the pressure caused by the boom in memory chips, which will drive down the stock price.US stocks It fell more than 10% after the bell.
Qualcomm’s revenue in the fourth quarter (last quarter) of the year ended September 27 fell 8% from the same period last year to US$10.3 billion, and its adjusted net earnings per share (EPS) were US$2.17, which exceeded expectations.
However, mobile phone business revenue last quarter fell 26% year-on-year to US$5.14 billion, which was lower than expected. Qualcomm said that its mobile phone business revenue has resumed quarter-on-quarter growth, and the Android mobile phone market in mainland China has also bottomed out and is about to grow again.
CEO Cristiano Amon said Qualcomm had identified memory issues early and was well prepared, and the Android market has continued to grow quarter-on-quarter.
However, Qualcomm also estimates that there will be “zero growth” in the mobile phone market next year.
Looking ahead to the quarter, Qualcomm expects revenue to be between US$10.4 billion and US$11.2 billion, the midpoint of which will exceed market expectations, but adjusted EPS to be between US$2.15 and US$2.35, the midpoint of which will fall short of analysts’ estimates of US$2.32.
This financial forecast also implies that the chip design division’s operating profit margin before interest will be between 20% and 22%, including a 3 percentage point stretch due to data center expansion, down from 24% last quarter.
The problem is supply costs. “The semiconductor industry is experiencing widespread increases in input costs from wafer foundry, assembly, test, advanced packaging, memory and other raw materials,” Qualcomm said.
Qualcomm is still optimistic about the prospects of data centers and expects data center revenue this quarter to reach US$650 million, higher than Wall Street’s expectations. Amon said this year will mark the beginning of a turning point in non-mobile phone business revenues. It is expected to grow by 60%, and annual data center revenue will reach US$5 billion. “We do not have a demand problem, but a supply problem.” “If there is more supply, performance may be better.”
Last quarter, Qualcomm’s automotive business revenue increased 89% to $1.99 billion, Internet of Things revenue increased 4.5% to $1.89 billion, and QTL division revenue, including licensing revenue, fell 7.5% year-on-year to $1.3 billion, both of which were better than expected.
Summary FAQ
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The main reason is that the revenue of the mobile phone business has declined by 26% year-on-year, and the EPS outlook for this quarter is also lower than market estimates. This also implies that the profit margin of the chip design department may decline, indicating that both the core business and profit momentum are under pressure.
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Qualcomm reported that mobile phone business revenue has begun to increase quarter-on-quarter, and the Android market in mainland China has bottomed out. However, it is also predicted that there will be “zero growth” in the mobile phone market next year, indicating that overall demand is still weak.
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Automotive business revenue increased by 89% year-on-year, Internet of Things increased by 4.5%, and data center revenue also exceeded expectations. Qualcomm believes that the non-mobile phone business will become a turning point and is expected to grow by 60% this year, with the data center revenue for the whole year expected to reach US$5 billion.
