Qualcomm (QCOM) results Q1 2021

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Qualcomm reported a profit for the first quarter after the bell on Wednesday.

Adjusted earnings exceeded expectations, but Qualcomm sales were slightly below Wall Street’s expectations, causing the stock to drop over 7% in expanded trading.

Here’s how Qualcomm behaved compared to refinitive consensus estimates:

  • Merits: Adjusted for $ 2.17 per share versus an estimated $ 2.10
  • Revenue: Adjusted for $ 8.23 ​​billion versus an estimated $ 8.27 billion

Revenue increased 63% year over year, while earnings increased 119%.

Both sales and earnings saw strong year-over-year growth as Qualcomm’s business was fueled by 5G smartphones that required chips and intellectual property, and an electronics boom during the pandemic.

Qualcomm expects revenue between $ 7.2 billion and $ 8 billion for the current quarter, a stronger forecast than analysts who track the expected stock. However, Qualcomm’s forecast revenue for its licensing division was between $ 1.25 billion and $ 1.45 billion in the current quarter, which is a bit weaker compared to analysts’ expectations of $ 1.43 billion.

At the end of last year, Qualcomm announced that it would change the way in which its business units are reported to split sales of cell phones, radio frequencies, automotive and Internet of Things chips. These businesses were previously reported together in Qualcomm’s “QCT” segment.

Chip sales rose sharply, Qualcomm announced on Wednesday. Cell phone chip growth rose 79% year over year to $ 4.22 billion for the quarter ended December. The RF front-end chips, which Qualcomm considers strategically important and which are used in conjunction with Qualcomm’s modems for 5G, increased 157% year over year.

Qualcomm’s business is closely tied to new cell phones that use 5G chips. Qualcomm expects high single-digit growth in phones shipping in fiscal 2021. Between 450 and 550 million 5G devices will hit the shelves in the reporting period. Qualcomm started rolling out 5G modems for Apple iPhones last fall.

Overall, Qualcomm’s chip business, QCT, posted an 81% year-over-year revenue increase for the quarter.

At Qualcomm’s QTL licensing division, which generates much of the company’s profits in San Diego, revenue increased 18% year over year to $ 1.66 billion.

In January Qualcomm announced it would buy Nuvia, a chip startup founded by Apple veterans, for $ 1.4 billion to strengthen technology for smartphones, laptops and car chips. Qualcomm announced that it is expected to spend $ 190 million on R&D and selling, general, and administrative expenses related to the purchase this year, of which $ 90 million will be stock-based compensation.

Wednesday’s report is the chipmaker’s first since last month announcing that CEO Steve Mollenkopf will retire later this year and be replaced by the company’s current president, Cristiano Amon. Mollenkopf’s resignation comes after seven challenging years that included legal issues with Apple, the Federal Trade Commission, and a hostile takeover attempt by Broadcom.