Qualcomm (QCOM) earnings Q1 2023

Qualcomm Shares fell 2% on Thursday after extended trading chip manufacturer reported lower first quarter revenue than analysts had predicted and weak quarterly guidance provided. Here’s how the company did it:

• Merits: $2.37 per share, adjusted, versus $2.34 per share as expected by analysts, according to Refinitiv.
• Revenue: $9.46 billion versus $9.60 billion expected by analysts, according to Refinitiv.

In the first quarter ended December 25, 2022, Qualcomm said net income fell 34% to $2.24 billion, or $1.98 per share, from $3.4 billion or $2.98 a share a year ago as a slowing economy and higher channel inventories hurt results. Sales fell by 12% compared to the previous year.

Revenue from Qualcomm’s CDMA Technologies (QCT) segment, which includes smartphone chips, high-frequency front-end components, automotive chips and IoT devices, generated $7.89 billion in revenue for the quarter. That figure was down 11% and below the consensus of $8.03 billion among analysts polled by StreetAccount.

In that segment, mobile phone sales hit $5.75 billion, down 18% but ahead of the StreetAccount consensus of $5.20 billion. Technology Industry Researcher IDC estimated that fourth-quarter smartphone shipments fell 18%, the sharpest drop on record.

“As the handset industry continues to experience lower demand, we now expect channel inventory levels to last at least through the first half of calendar 23,” Qualcomm CEO Cristiano Amon said in a conference call with analysts. Demand is weakest in the middle and lower end of the market, he said.

The global economy and Covid shutdowns in China have prompted executives to negatively impact the number of 3G, 4G and 5G handset shipments in 2023 compared to 2022, Amon said.

The company is making further spending cuts given the economic and demand environment, he said.

The Qualcomm Technology Licensing (QTL) segment, which includes rights to use the company’s wireless patents, returned $1.52 billion, down 16% and slightly below the StreetAccount consensus of $1.54 billion.

Qualcomm works with PC makers to win platform designs for consumer and commercial devices, Amon said.

Referring to the guidance, Qualcomm called for second-quarter adjusted earnings of $2.05-$2.25 per share on revenue of $8.7-9.5 billion, down 18.5% in revenue % in the middle range means. Analysts polled by Refinitiv had expected adjusted earnings per share of $2.26 on sales of $9.55 billion.

In the quarter Qualcomm and Renault Group announced an extension of their collaboration and said Qualcomm would invest in Ampere, the automaker’s electronics and software business.

Qualcomm stock is down 28% over the past year, excluding after-hours movement, compared to a 9% decline in the S&P 500 index over the same period.

REGARD: Qualcomm CEO: We need to double total semiconductor manufacturing in the next ten years