Qualcomm stock drops despite earnings beat, 5G sales surge amid supply constraints

Qualcomm stock drops despite earnings beat, 5G sales surge amid supply constraints

Revenue comes in just shy of expectations, while profit and outlook exceed projections

Qualcomm Inc. shares dropped in the extended session Wednesday, after the chip maker’s revenue came in slightly lower than expected, acknowledging that industry-wide supply constraints were affecting performance.

“Notably, our strong performance and our outlook would have been even stronger had we not been supply constrained,” Qualcomm QCOM, -1.51% Chief Executive Steve Mollenkopf said on the analyst call.

Qualcomm President Cristiano Amon elaborated on the call about the supply situation.

“We have seen, I think, probably shortage across the entire industry,” Amon said. Chip demand is outpacing supply for many chip makers and hardware companies in today’s digital-dominated, COVID-19 environment.

In early January, Qualcomm said Amon will succeed Mollenkopf as CEO on June 30.

“The V-shaped recovery that we’ve seen across the industry and all of the accelerated digitization is driving semiconductors, and we see that across the board,” Amon told analysts on the call.

Qualcomm reported fiscal first-quarter net income of $2.46 billion, or $2.12 a share, compared with $925 million, or 80 cents a share, in the year-ago period. Adjusted earnings, which exclude stock-based compensation expenses and other items, were $2.17 a share, compared with 99 cents a share in the year-ago period. Revenue rose to $8.24 billion from $5.08 billion in the year-ago quarter.

Analysts surveyed by FactSet had forecast $2.10 a share on revenue of $8.27 billion, based on Qualcomm’s forecast of $1.95 to $2.15 a share on revenue of $7.8 billion to $8.6 billion.

Qualcomm said its wireless and mobile business, which includes 5G chips and sales for handsets, surged 79% to $4.22 billion from a year ago, while sales of chips for mobile-device antennas, or RF front-end products, soared 157% to $1.06 billion from the year-ago quarter.

Shares fell more than 8% in after-hours trading immediately following the release of the results, and were down 7.4% by the time the conference call ended. That followed a 1.5% decline in the regular session, with Qualcomm shares closing at $162.30.

Qualcomm forecast adjusted second-quarter earnings of $1.55 to $1.75 a share on revenue of $7.2 billion to $8 billion, while analysts were estimating $1.58 a share on revenue of $7.11 billion.

Over the past 12 months, Qualcomm shares are up 88%, compared with a 65% gain for the PHLX Semiconductor Index SOX, -2.12%, an 18% rise by the S&P 500 index SPX, +0.10% and a 47% gain in the tech-heavy Nasdaq Composite Index COMP, -0.02%.

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