Qualcomm chip sales indicate some smartphone strength

Qualcomm chip sales indicate some smartphone strength

(Reuters) – U.S. chipmaker Qualcomm Inc’s (QCOM.O) quarterly revenue and income topped Wall Street forecasts, suggesting slowdown within the world smartphone enterprise is likely to be much less extreme than feared after a string of weak forecasts from suppliers.

FILE PHOTO: An indication on the Qualcomm campus is seen in San Diego, California, U.S. November 6, 2017. REUTERS/Mike Blake/File Photo

The outcomes introduced in Qualcomm’s smartphone chip enterprise contrasted to these from main cell phone elements makers in Asia, together with TSMC (2330.TW) and SK Hynix Inc (000660.KS), which have warned of slower progress of their smartphone chip divisions.

While income from Qualcomm’s chips division – its largest – rose 6 p.c within the three months ended March 25, income from the licensing enterprise plunged 44 p.c, reflecting the withholding of income in a high-profile patent battle with Apple Inc (AAPL.O).

Despite the robust quarter for chip sales, the corporate does see some indicators of weak point.

It forecast progress of about 5 p.c in trendy cellular handsets for the rest of the 12 months, which is decrease than anticipated. Handset costs, nevertheless, are increased than anticipated.

“Qualcomm posted solid results, but its guidance pointed to a softer handset market, particularly in China,” stated Moody’s Senior Vice President Rick Lane.

Qualcomm is also ready for Chinese regulators to contemplate its utility to purchase chipmaker NXP, a deal that Chief Executive Steve Mollenkopf expects to undergo. If it doesn’t, Qualcomm plans to make use of the money devoted to the deal for a share buy-back. The deal was held up by diplomatic issues between international locations, relatively than Qualcomm-specific issues, he stated.

The greatest spat is over a U.S. ban on exports to China’s ZTE Corp (000063.SZ) after it was caught exporting to Iran. Qualcomm stated it expects the lack of enterprise with ZTE to decrease its income by three cents per share subsequent quarter, although executives additionally recommended that different good telephone makers that it additionally does enterprise with might make up for that misplaced income in the long term.

The outcomes come as San Diego-based Qualcomm tries to persuade shareholders it will possibly enhance earnings by chopping annual prices by $1 billion and resolving the Apple dispute.

Qualcomm on Wednesday forecast current-quarter income of between $four.eight billion and $5.6 billion, and adjusted earnings of 65 to 75 cents per share. Analysts had been anticipating income of $5.32 billion and earnings of 75 cents per share, based on Thomson Reuters I/B/E/S.

Qualcomm’s quarterly internet revenue fell to $363 million, or 24 cents per share, from $749 million, or 50 cents per share, a 12 months earlier.

Excluding one-time gadgets, Qualcomm earned 80 cents per share, forward of analysts’ common estimate of 70 cents, based on Thomson Reuters I/B/E/S.

Total income rose four.9 p.c to $5.26 billion, topping expectations of $5.19 billion.

Qualcomm shares rose 1 p.c to $50.25 in after-hours buying and selling on Wednesday.

The sentiment additionally appeared to assist enhance different chipmakers in after-hours buying and selling, with reminiscence chipmaker Micron Technology (MU.O) up 1 p.c to $48.12 after the announcement.

Reporting by Sonam Rai in Bengaluru and Stephen Nellis in San Francisco; enhancing by Sai Sachin Ravikumar, G Crosse and Peter Henderson

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