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Qualcomm’s rival Texas Instruments recently gave a forecast for the June quarter that was weaker than expected.
Pau Barrena / AFP via Getty Images
Qualcomm gave beleaguered chip investors some needed relief.
The maker of mobile processors and 5G wireless chips posted strong earnings for the March quarter and gave guidance for the June quarter above expectations. The stock rose in after-hours trading.
For the March quarter, the semiconductor company reported adjusted earnings per share of $3.21, compared to Wall Street’s consensus estimate of $2.95, according to FactSet. Revenue came in at $11.16 billion which was above with analysts’ expectations of $10.6 billion. Qualcomm also gave a revenue forecast range for the current quarter of $10.5 billion to $11.3 billion, which was above the consensus estimate of $10.025 billion.
Recently, analysts have been warning their clients to expect weak results for the smartphone market. Last week, research firm Canalys said worldwide shipments for mobile phones fell 11% year-over-year in the March quarter due to difficult economic conditions and weakening demand.
Qualcomm shares rallied as much as 4% initially following the release.This is breaking news. Read a preview of Qualcomm earnings below and check back for more analysis soon
Deteriorating smartphone demand may hurt Qualcomm’s business this year. Investors will get a better insight about industry trends when the maker of mobile processors and 5G wireless chips reports after the market close.
Wall Street consensus estimates for
Qualcomm
(ticker:
QCOM
) project that the company will report March quarter revenue of $10.6 billion with adjusted earnings per share of $2.95, up from $1.90. Analysts’ consensus estimate for the current quarter’s revenue is also $10.025 billion.
At the same time, analysts are warning their clients to expect weak results for the smartphone market. Last week, research firm Canalys said worldwide shipments for mobile phones fell 11% year over year in the March quarter due to difficult economic conditions and weakening demand.
On Monday, Morgan Stanley analyst Joseph Moore lowered his price target on Qualcomm to $167 from $223, while maintaining his Overweight rating. “That reduction reflects current challenges in the handset market, which we still view as somewhat temporary in nature,” he wrote. The stock closed at $133.50 on Tuesday.
Earlier this week, Bernstein analyst Stacy Rasgon reiterated his Outperform rating and $200 price target, but reduced his earnings estimates for this year and next year on smartphone market weakness.
Qualcomm shares were down 27% year to date as of close of trading on Tuesday. For the same period, the
iShares Semiconductor ETF
(SOXX), which tracks the performance of the ICE Semiconductor Index, has declined 26%.
The smartphone chip maker’s results come a day after
Texas Instruments
provided a revenue forecast for the June quarter that was below expectations, citing lower demand in China.
Write to Tae Kim at tae.kim@barrons.com