Thursday, April 19, 2012

Qualcomm Q2

Qualcomm beats earnings, but shares fall as Q3 guidance falls short.
Qualcomm projected third quarter estimates that fell below analyst expectations which subsequently led to a drop of 7% in share price after hours, despite beating expectations for the second quarter.

Second quarter revenues were $4.94 billion, up 28% year over year, and EPS came in at $1.01 per share, beating consensus EPS of $0.95 per share. Net Income of $2.23 billion was up 123% year over year. Qualcomm saw continued growth in their 3G and 4G smartphone chips, which saw Europe launch its first 4G smartphones this quarter and Verizon in the United States committed to vastly expand its 4G lineup.

Third quarter guidance for EPS is 61 cents per share which is low in comparison with analyst consensus of 77 cents per share. This is in large part due to a drop in revenue to $3.62 billion compared with consensus of $4.81 billion. This drop in revenue is attributed to the seasonality of demand for Qualcomm as well as an increase of supply has pushed manufacturing revenue for some orders into the fourth quarter.

Qualcomm has also increased FY EPS to a range of $3.41 to $3.56 per share from a prior range of $3.36 to $3.56. This change in guidance is due largely to higher estimated selling costs of their 3G and 4G chips.

Shares fell to as low as $62 but have since retraced to $65 in after market trading. Despite poor reactions due to third quarter guidance Qualcomm continues to be a top tier stock and should continue to outperform the market due to remaining a key player in the Smartphone industry.

-Ryan Ranado

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