06-02-2025
Qualcomm's licensing unit forecast overshadows earnings beat, sending shares lower
- Qualcomm posted better-than-anticipated fiscal first-quarter results thanks to an artificial intelligence-fueled rebound in smartphone demand, although the results were overshadowed by the chipmaker's announcement that its lucrative patent licensing unit will not see sales growth this year.
U.S.-listed shares in Qualcomm (NASDAQ:QCOM) subsequently fell in premarket dealmaking on Wednesday, while the stock also dropped in Frankfurt trading. The shares have rallied by more than 14% so far this year, as investors have been hoping for a surge in Qualcomm's financial performance on the back of solid AI demand.
San Diego, California-based Qualcomm reported adjusted earnings per share of $3.41 and revenue of $11.67 billion for the quarter ended on December 29. The figures surpassed projections of $2.97 and $10.03 billion, respectively, according to an forecast based on a poll of analysts.
The beat was supported by growing demand for chips used in handsets, suggesting a nascent recovery in the smartphone market. These devices are a key driver of Qualcomm's operations, with the company supplying a range of big-name corporate customers, including China's Vivo and Xiaomi (OTC:XIACF) as well as iPhone-manufacturer Apple (NASDAQ:AAPL).
Revenue from smartphones jumped 13% in $7.57 billion in the first quarter. Meanwhile, revenues from its automative division and Internet of Things, or IoT, unit -- which houses its PC chips -- both climbed versus the year-ago period and topped Wall Street projections.
For its second quarter, the group is forecasting adjusted per-share income of $2.70 to $2.90 on revenue of $10.3 billion to $11.2 billion, compared with estimates for $2.71 and $10.36 billion. Last month, Qualcomm, the world's largest supplier of chips that connect smartphones to wireless networks, unveiled a deal to provide processors to help power smartphones made by South Korea's Samsung (KS:005930). The firm is working with software giant Microsoft (NASDAQ:MSFT) and other computer makers to supply chips to an array of laptops and PCs.
Meanwhile, Qualcomm licensing chief Alex Rogers (NYSE:ROG) said discussions with Huawei are "still in play". An agreement to sell chips to the Chinese telecoms titan -- a major deal that analysts say contributed between $0.10 to $0.15 per share to Qualcomm's profits -- expired last year.
Following the expiration, Qualcomm forecast that its patent licensing business, in which 5G-connect product makers pay the company a fee for its technology, will see no growth in revenue this year. However, the forecast does not include the potential from a renewal with Huawei, Rogers noted in a call with analysts.
"[The] December beat and strong March upside [were] largely better than expected but the lack of clear June guidance and Huawei [...] delay is apparently enough to spook investors," analysts at Barclays (LON:BARC) said in a note to clients.
(Yasin Ebrahim contributed reporting.)
Related Articles
Qualcomm's licensing unit forecast overshadows earnings beat, sending shares lower
Telenor stock rises following earnings report
Watches of Switzerland boosted by U.S., UK demand in holiday quarter
