Qualcomm: Sluggish smartphone demand weighs down financial forecast

Sluggish smartphone gross sales and bloated chip inventories continued to crush Qualcomm’s monetary leads to the March quarter, and it seems to be like these headwinds aren’t going to ease for some time.

San Diego’s largest publicly traded firm stated Wednesday it expects a minimum of a few extra quarters of powerful situations for its enterprise — notably in smartphones — earlier than reaching the underside.

“As we navigate this difficult surroundings, we stay centered on the vital elements that we are able to management to emerge stronger from this downturn,” stated Chief Government Cristiano Amon. “Our prime precedence stays to put money into our diversification technique.”

The corporate’s fiscal second-quarter outcomes have been down double digits from the identical interval final yr. However they have been according to Wall Avenue analysts’ expectations given persistent inflation and sputtering economies throughout the globe.

Buyers, nevertheless, have been hoping that Qualcomm would sign some excellent news about reaching the underside and a possible rebound after that.

It didn’t occur, as Qualcomm’s forecast for the June quarter referred to as for continued income and earnings declines.

“Whereas expectations have been for a rebound in China, demand within the second half of the calendar yr, now we have not seen proof of significant restoration and aren’t incorporating enhancements into our assumptions,” stated Amon in a convention name with analysts.

Qualcomm provides processors for a lot of flagship Android smartphones, together with the Samsung Galaxy S23 worldwide. It additionally provides cellular chips utilized in Apple’s iPhones. However it’s working to diversify its enterprise past handsets — together with into related autos, laptops, networking gear and myriad different non-smartphone related gadgets.

For the quarter, Qualcomm introduced in income of $9.27 billion, down 17 % over the identical quarter final yr.

Adjusted earnings reached $2.4 billion, or $2.15 per share — a drop of 33 % yr over yr.

These outcomes barely beat Wall Avenue analysts’ consensus projections for income and have been according to estimates for earnings.

Wanting forward, nevertheless, Qualcomm’s midpoint steerage got here up in need of analysts’ goal. The corporate pegs income for the present quarter at $8.5 billion and adjusted earnings of $1.80 per share.

Analysts’ consensus forecast for the June quarter referred to as for $9.2 billion in income and adjusted earnings of $2.20 per share.

Qualcomm launched outcomes after markets closed. Its shares ended common buying and selling down almost 3 % at $112.83. However they shed one other 6.8 % in prolonged buying and selling, falling to $105.25 on the Nasdaq Alternate.

Stacy Rasgon, an analyst with Bernstein Analysis, stated smartphone gross sales “stay very weak” with shipments down about 15 % yr over yr for the March quarter.

As well as, the stock glut amongst smartphone makers is bleeding over into the Web of Issues market, the place income fell 24 % yr over yr to $1.4 billion.

Final quarter, Qualcomm introduced it might be lowering working bills by 5 %.

The corporate has reduce about 230 jobs in San Diego since December. The corporate employs about 12,500 staff regionally.

Qualcomm is on monitor to fulfill that 5 % goal, together with decreased spending in handsets to fund variety investments in automotive and Web of Issues, stated Chief Monetary Officer Akash Palkhiwala.

“Because the surroundings continues to evolve, we’ll consider and execute extra price discount alternatives to assist exceed our working expense goal,” stated Palkhiwala.