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Qualcomm braces for impact

Earnings report expected to be grim...but stock may not take a hit

Qualcomm reports its second-quarter results Wednesday (April 20), and Wall Street expects big declines from a year ago.

Thomson Reuters reports that the consensus of 35 analysts is for earnings to be down 33 percent and revenue down 23 percent from the same quarter of last year.

Analysts expect second-quarter earnings per share to be 96 cents with sales $5.34 billion in the quarter. The profit and revenue performance may be down from a year ago, but it should be in line with the company's guidance to analysts three months ago, according to Investor's Business Daily.

When reporting the first quarter, Qualcomm said it was looking for second-quarter earnings-per-share of 90 cents to $1, and revenue of $4.9 billion to $5.7 billion.

Dan Caplinger of The Motley Fool says analysts see "massive declines" in sales and revenue Wednesday.

"It's critical for the company to find a long-term strategy that will help it get out of its downturn," says Caplinger. However, he notes that Qualcomm's Snapdragon 820 processor successfully made it into Samsung's Galaxy S7. One problem last year was that the Snapdragon 810 processor did not make it into the Galaxy S6.

Wall Street tends to concentrate more on whether a company's sales and earnings topped estimates, rather than whether they were up or down from the same period of the prior year.

No matter the news, Qualcomm stock could jump Wednesday. Today (April 18) the stock rose almost 1 percent to $51.55, although it was generally a good day for the stock market.

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Qualcomm reports its second-quarter results Wednesday (April 20), and Wall Street expects big declines from a year ago.

Thomson Reuters reports that the consensus of 35 analysts is for earnings to be down 33 percent and revenue down 23 percent from the same quarter of last year.

Analysts expect second-quarter earnings per share to be 96 cents with sales $5.34 billion in the quarter. The profit and revenue performance may be down from a year ago, but it should be in line with the company's guidance to analysts three months ago, according to Investor's Business Daily.

When reporting the first quarter, Qualcomm said it was looking for second-quarter earnings-per-share of 90 cents to $1, and revenue of $4.9 billion to $5.7 billion.

Dan Caplinger of The Motley Fool says analysts see "massive declines" in sales and revenue Wednesday.

"It's critical for the company to find a long-term strategy that will help it get out of its downturn," says Caplinger. However, he notes that Qualcomm's Snapdragon 820 processor successfully made it into Samsung's Galaxy S7. One problem last year was that the Snapdragon 810 processor did not make it into the Galaxy S6.

Wall Street tends to concentrate more on whether a company's sales and earnings topped estimates, rather than whether they were up or down from the same period of the prior year.

No matter the news, Qualcomm stock could jump Wednesday. Today (April 18) the stock rose almost 1 percent to $51.55, although it was generally a good day for the stock market.

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Comments
7

While it might seem wildly improper to rejoice at the sagging prospects for a big local employer, I can't avoid it. This one spawned many employee-millionaires about two decades back, but since then has been a poor corporate citizen. It abuses the H-1B visa system, and has decided to meddle in local politics. Oh, did I say that? Actually it is the Jacobs family fiefdom, which still runs Qualcomm, that does that. Old Irwin, who used to limit his money spews to things such as the Symphony and La Jolla Music Society, now spreads his billions around in local political races, and in meddling in local affairs such as his remodel of Balboa Park. His sons are no better. We need their involvement like we need the plague. Old style philanthropists didn't switch back and forth between altruism and political activism. They did the giving at the ends of their careers after having been most avaricious in their earlier years. With Jake and the boys, the altruism seemed to have come many years ago; now they seem to have found their traction and expect to get their friendly pols elected regardless of the desires of the public.

So, let's struggle. We don't need the Jacobs activism and their many millions of pocket change funneled into the election campaigns of their favorites, such as Scott Peters. Money is money, folks, whether it comes from evil Republicans, or from "civic minded" Dem robber barons like Irwin, Paul, and the other Jacobs boys.

April 18, 2016

Visduh: Qualcomm is still a sound, innovative company. However, its stock has not performed for years, as you mention. My main criticism is the outlandish pay of the two top executives. I agree with you that is abuses H-1B. Best, Don Bauder

April 19, 2016

QUALCOMM REVENUES FALL; STOCK RISES, FALLS, REBOUNDS SLIGHTLY IN AFTER-HOURS TRADING. This afternoon after the market closed, Qualcomm reported a 19.5 percent fall in second quarter revenues, hurt by lower demand for its chips for mobile devices amid stiff competition from Chinese and Taiwan rivals, according Reuters. Total revenue fell to $5.55 billion from $6.89 billion in the same quarter a year earlier.

Net earnings per share attributable to Qualcomm rose to $1.16 billion, or 78 cents per share, from $1.05 billion, or 63 cents per share in the same quarter a year ago.

In after-hours trading, the stock initially jumped, then dipped slightly into the red, then rebounded moderately. At 1:23 p.m. it was up 0.02% to $52.20. Best, Don Bauder

April 20, 2016

Layoffs to come? Count on it.

April 21, 2016

Visduh: Yes, there may be more layoffs to follow those of last year, although the company has not intimated that. See my entry below. Best, Don Bauder

April 21, 2016

QUALCOMM LOSING APPLE BUSINESS TO INTEL, IS HAVING SMARTPHONE PROBLEMS. The publication Investor's Business Daily says that in his address to analysts after the earnings release yesterday, Qualcomm chief executive Steve Mollenkopf implied the company will lose some business, but he wasn't using names.

The name: Apple. Without saying so, Mollenkopf implied that the company will lose chip business in Apple's iPhone 7 to Intel. The new phone is expected to come out this fall. Mollenkopf told analysts it was important for planning purposes to factor in "a range of second-sourcing assumptions at our large customers."

Pacific Crest Securities analyst Michael McConnell said that "Apple iPhone 7 modem share loss is confirmed," says Investor's Business Daily. Translation: Qualcomm loses some chip business in the Apple iPhone7.

Overall, however, Qualcomm stock hasn't moved much in the last two days. Best, Don Bauder

April 21, 2016

In my opinion Intel and Qualcomm are similar in a way - they have both made fortunes based largely on leveraging market dominance in one critical product. The revenue streams from both company's one critical product may be dying soon so they are both in trouble.

Intel's success for almost 40 years has been largely due to one chip: the 8086 CPU, and its' derivatives. Intel has developed the world's leading process foundary and has the world's best CPU architecture, and has been able to leverage their monopoly in the 8086 CPU business to great success.

Qualcomm's revenue stream and business models have been more diverse than Intel's but their revenues are still largely based on licensing CDMA and leveraging their strong position in that space.

It remains to be seen how well both companies adapt to a changing world.

April 24, 2016

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