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/2023.02.02
/Qualcomm sees earnings below Street as smartphone market sags.txt
(Updates with additional quote, changes second paragraph, adds | |
detail on Apple iPhone sales)BENGALURU/OAKLAND, Calif. Feb 2 (Reuters) - Qualcomm Inc | |
forecast second-quarter revenue and profit below Wall | |
Street estimates on Thursday as the chipmaker grapples with the | |
combined toll of weak demand for smartphones and a supply glut, | |
a situation that is expected to persist into the first-half of | |
this year.Inflation and macroeconomic uncertainty have hurt consumer | |
electronics sales, and while Qualcomm has been somewhat buffered | |
by its focus on premium smartphones, analysts said even that | |
market has been hit.The stock, which initially rose 2.7% in after-hours trading, | |
fell 3%."The handset industry continues to experience reduced | |
demand, and we are now expecting elevated channel inventory | |
levels to persist at least through the first half of calendar | |
2023," Cristiano Amon, Qualcomm CEO told investors.To cope, he said the company would further cut spending and | |
streamline operations.On Wednesday, Samsung Electronics launched its latest Galaxy | |
S23 series smartphone which now uses 100% of Qualcomm processors | |
globally, but the launch comes at a tough time in the market."Discussions with mobile service providers revealed a | |
continued and deepening weakness in smartphone demand globally | |
which doesn't bode well for Qualcomm," said Maribel Lopez, tech | |
analyst at Lopez Research.Apple, the world's largest listed company, said iPhone sales | |
fell last quarter for the first time since 2020.Qualcomm has also diversified, pushing into new fast-growing | |
areas such as automotive. Revenue for that business in the | |
fiscal first quarter rose 58% on year to $456 million, although | |
the company expects that to be sequentially flat in the current | |
quarter.The chipmaker forecast current quarter revenue in the range | |
of $8.7 billion to $9.5 billion, compared with analysts' | |
estimates of $9.55 billion, according to Refinitiv data.Its fiscal first quarter revenue dropped 12% year-on-year to | |
$9.46 billion, below Wall Street expectation of $9.60 billion."I don't think we have hit rock bottom (for the smartphone | |
market) yet. We still have a rough year ahead," said IDC analyst | |
Nabila Popal. "Real recovery is not likely until 2024."First quarter revenue from Qualcomm's handset business, | |
which makes up the largest chunk of total sales, fell 18% on | |
year to $5.75 billion, compared to 40% growth in the previous | |
quarter.It expects adjusted earnings per share to be between $2.05 | |
and $2.25, compared to analysts expectations of $2.26 per share.In the first quarter, Qualcomm reported adjusted earnings | |
per share of $ 2.37, which compares with the analyst consensus | |
of $2.34 per share, according to Refinitiv data.Qualcomm also said during the earnings call that it doesn't | |
expect its current licenses to export 4G, Wi-Fi and other chips | |
to Chinese telecom giant Huawei to be impacted by | |
reports that the U.S. Commerce Department has stopped granting | |
export licenses to Huawei."Those licenses were issued because Congress reached the | |
determination that they don't affect national security issues. | |
Those will continue for some number of years," Alex Rogers, | |
president of Qualcomm Technology Licensing and Global Affairs | |
said on the call with investors.(Reporting by Chavi Mehta in Bengaluru and Jane Lanhee Lee in | |
Oakland; Editing by Shailesh Kuber and Anna Driver) |