Qualcomm stock falls as Huawei business stripped from outlook

Qualcomm stock falls as Huawei business stripped from outlook

Qualcomm sees up to $5.1 billion in revenue, while analysts expect $5.67 billion

Qualcomm Inc. shares fell in the extended session Wednesday after the chip maker’s non-settlement revenue came in below Wall Street estimates and its outlook stripped out business from China’s Huawei Technologies Co.

Qualcomm QCOM, -2.21% shares fell 4.9% after hours, following a 2.2% decline in the regular session to close at $73.16. In comparison, the S&P 500 index SPX, -1.09% closed down 1.1%, the tech-heavy Nasdaq Composite Index COMP, -1.19% fell 1.2%, and the PHLX Semiconductor Index SOX, -3.22% dropped 3.2%.

“As a result of the export ban, Huawei shifted their emphasis to building market share in the domestic China market where we do not see the corresponding benefit in product or licensing revenue,” said Steve Mollenkopf, Qualcomm’s chief executive, on a post-earnings conference call.

Qualcomm expects adjusted fiscal fourth-quarter earnings of 65 cents to 75 cents on revenue of $4.3 billion to $5.1 billion, while analysts had forecast earnings of $1.09 a share on revenue of $5.67 billion. Qualcomm said it has yet to meet a final agreement with Huawei and said its outlook does not include payments from the Chinese company.

“In addition, our customers in the China market are working through their existing 4G inventory and de-emphasizing their second-half 2019 4G launches as they shift their priority to their 5G launches in early 2020,” Mollenkopf said. “As a result we do not expect the typical seasonal benefits given this unique market dynamics.”

“For the first calendar quarter of 2020, we anticipate reaching the inflection point as our financial results begin to reflect the benefits of our substantial efforts over the years to bring 5G to the market worldwide,” Mollenkopf said.

The company reported fiscal third-quarter net income of $2.15 billion, or $1.75 a share, compared with $1.2 billion, or 81 cents a share, in the year-ago period. Adjusted earnings were 80 cents a share.

Revenue rose to $9.64 billion from $5.58 billion in the year-ago quarter. Less revenue received from Qualcomm’s settlement with Apple Inc. AAPL, +2.04% , the company reported adjusted revenue of $4.9 billion.

Analysts surveyed by FactSet had forecast earnings of 76 cents a share on revenue of $5.09 billion.

At the close, Qualcomm shares were up 29% for the year, while the S&P 500 has risen 19%, the Nasdaq has grown 23%, and the SOX chip index has gained 34%.

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