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Qualcomm shares fall more than 5% after poor outlook, months-long chip surplus


Shares of Qualcomm Inc. fell in extended trading Wednesday following the chipmaker’s dire outlook and an estimated two months or more of inventory the company needs to clear up in its core business.

Qualcomm
QCOM,
-4.12%

shares fell as much as 7% in a few hours, after falling 4.1% to close at $112.50 in normal trading. At the end of July, the San Diego-based chipmaker forecast cut because of weak smartphone market has yet to penetrate the premium handset market.

On a call with analysts, Chief Executive Officer Cristiano Amon said rapidly growing weak demand was linked to “prolonged COVID and macroeconomic difficulties in China” and the “rapid deterioration of the economy”. demand and easing supply constraints” in the chip industry. ” will earn about 80 cents a share in first-quarter earnings.

“That’s the key factor,” Amon told analysts on the call. “It’s mostly the handset consumer story.” As a result, earnings for the first quarter will hit 80 cents a share, the company said.

Another big factor is that companies are spending less. “Companies on the board have a much higher inventory policy, the supply chain is settled, and you get macroeconomic uncertainty, you have a hard time trying to take inventory to a different level from the current state of limited demand.”

Qualcomm forecasts first-quarter earnings of $3 to $3.30 a share on revenue of $9.2 billion to $10 billion, while Street estimates $3.43 a share on revenue 12.02 billion dollars.

Read: Meta-spend dents Facebook stock, but here are chip stocks that are benefiting

Chief Financial Officer Akash Palkhiwala told analysts there is about eight to 10 weeks of upside in the channel. In the meantime, Qualcomm is working on a hiring freeze and looking at cost-saving measures, executives told analysts.

While handset chip sales rose 40% to a record $6.57 billion from a year ago, topping Street expectations of $6.55 billion, company forecasts show. large inventories in Qualcomm’s CDMA Technologies unit, which includes handsets and RF chips as well as chips for cars and the Internet of Things.

Qualcomm expects QCT sales of $7.7 billion to $8.3 billion, and revenue from Qualcomm’s technology licensing, or QTL, of $1.45 billion to $1.65 billion. Analysts had forecast QCT revenue of $10.42 billion and QTL revenue of $1.71 billion.

Qualcomm reported fourth-quarter QCT revenue of $9.9 billion, up 28% from a year ago. Analysts estimate $9.84 billion, based on the company’s forecast of $9.5 billion to $10.1 billion.

Automated chip sales in the fourth quarter rose 58% to a record $427 million, and Internet of Things, or IoT, sales jumped 24% to a record $1.92 billion. The Street expects auto sales of $362.4 million and IoT sales of $1.82 billion.

QTL revenue fell 8% to $1.44 billion versus Wall Street estimates of $1.58 billion, based on the company’s forecast of $1.45 billion to $1.65 billion.

Read about: Intel quarterly results, AMD quarterly results

The company reported fiscal fourth-quarter net income of $2.87 billion, or $2.54 a share, compared with $2.8 billion, or $2.45 a share. , during the previous year period. The chipmaker reported adjusted earnings, excluding stock-based compensation and other expenses, of $3.13 a share, compared with $2.55 a share in previous year period. Total revenue in the third quarter rose to $11.4 billion from $9.34 billion in the same period last year.

Analysts had estimated earnings of $3.13 per share on revenue of $11.32 billion, based on Qualcomm’s forecast of $3 to $3.30 a share on revenue of $11 billion. dollars to $11.8 billion.

So far, Qualcomm stock is down 38% compared to a 41% drop in the PHLX Semiconductor Index
NUMBER X,
-3.09%
,
down 21% by the S&P 500
SPX,
-2.50%

and down 33% by the tech-heavy Nasdaq Composite Index
COMP,
-3.36%
.

Shares of Advanced Micro Devices Inc.
AMD,
-1.73%

outperformed the broader market on Wednesday after the chip manufacturer said it will release excess inventory at the end of the yearand forecast that embedded and data center product sales will continue to grow.

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