ReutersFeb 01, 2018 08:48:36 IST
Chipmaker Qualcomm Inc’s profit and revenue beat expectations as demand surged for its chips used in smartphones and cars, but an earnings forecast for the current quarter fell below analysts’ estimates due to tepid mobile sales in China.
China’s smartphone market in 2017 was weaker than expected with 4G handset shipments down 11 percent, according to Bernstein analyst Stacy Rasgon.
“Performance of the current quarter is weighed down by Apple and China,” Stifel analyst Kevin Cassidy said.
“If there wasn’t the Broadcom bid the stock might be down 5 percent instead ... I don’t think investors are focused really on the near term operating results or even guidance at this point,” he said.
Shares of the company were marginally lower in late trade.
The company’s CDMA technologies unit, its largest business, saw a 13 percent rise in revenue to $4.65 billion in the first quarter ended 24 December. But licensing revenue dropped 28 percent to $1.30 billion, weighed down by a dispute with Apple Inc.
Apple sued Qualcomm last January, accusing it of overcharging for chips and refusing to pay some $1 billion in promised rebates.
“We remain open to finding a path to resolution (with Apple),” Qualcomm Chief Executive Steve Mollenkopf said on a call with analysts.
The company forecast second-quarter revenue of $4.8 billion to $5.6 billion and adjusted earnings per share of 65 cents to 75 cents, below analysts’ estimates for revenue of $5.58 billion and earnings of 85 cents, according to Thomson Reuters.
In the first quarter, Qualcomm posted a net loss of $5.95 billion due to a $6 billion charge for new U.S. tax laws and a $868 million charge for a fine imposed by the Korea Fair Trade Commission.
Excluding items, Qualcomm earned 98 cents per share, topping analysts’ average estimate of 91 cents, according to Thomson Reuters.
Revenue rose 1.2 percent to $6.07 billion and exceeded estimates of $5.93 billion.
Qualcomm is in the midst of closing its long-pending $38-billion deal to buy automotive chip maker NXP Semiconductors. In November, it rebuffed a $103-billion takeover bid by Broadcom Ltd.
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