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Qualcomm Inc. shares rose in the extended session Wednesday after the chip maker topped Wall Street estimates, forecast a COVID-19-impaired outlook still was in the ballpark of analysts’ consensus, and said it still expects 5G sales to fall within its projections.
“In the June quarter, we estimate the overall handset market to be down approximately 30% driven by the impact of shutdowns in the rest of the world while benefiting from the rebound we’re seeing in China,” said Qualcomm Chief Executive Steve Mollenkopf during the analyst call. That translates into a hit of 30 cents a share for third-quarter earnings, the company said.
Qualcomm QCOM, +4.88% expects adjusted third-quarter earnings of 60 cents to 80 cents a share on revenue of $4.4 billion to $5.2 billion, while analysts expect 78 cents a share on revenue of $4.89 billion.
“Total demand will depend on the speed of the economic recovery,” Mollenkopf told analysts. “However, we see no change in our calendar year 2020 5G smartphone forecast. As we look to the second half of calendar 2020, while there are a few regions with minor delays in 5G network deployments, overall 5G is progressing as planned and we continue to be well-positioned to drive the rapid adoption of 5G globally.”
Qualcomm still expects to deliver 175 million to 225 million 5G handsets globally in the 2020 calendar year.
Patrick Moorhead, principal analyst at Moor Insights & Strategy, said the earnings forecast reduction doesn’t come as a surprise.
“The biggest surprise, however, is that the company is sticking to its annual 5G handset unit forecast of 175M-225M units which are very profitable for the company,” said Moorhead in emailed comments. “This is a very good sign for the company as it indicates ‘business as usual’ for 5G handsets.”
Qualcomm reported fiscal second-quarter net income of $468 million, or 41 cents a share, compared with $663 million, or 55 cents a share, in the year-ago period. Adjusted earnings were 88 cents a share, compared with 77 cents a share in the year-ago period.
Revenue rose to $5.22 billion from $4.98 billion in the year-ago quarter.
Analysts surveyed by FactSet had forecast earnings of 79 cents a share on revenue of $5.03 billion.
Qualcomm shares rose 2.9% after hours, following a 4.9% rise in the regular session to close at $78.97.
Over the past 12 months, shares of Qualcomm have fallen 9%. In comparison, the S&P 500 SPX, +2.65% is flat, the tech-heavy Nasdaq Composite Index COMP, +3.56% is up 9%, and the PHLX Semiconductor Index SOX, +4.93% is up nearly 17% over that time.
Of the 29 analysts who cover Qualcomm, 16 have buy or overweight ratings, 11 have hold ratings, and two have sell ratings with an average price target of $92.26, according to FactSet.
