Is Qualcomm on the Move this Quarter? Here’s What to Watch

QUALCOMM Inc. (QCOM) Information Technology - Communications Equipment | Reports April 20, After Market Closes

Key Takeaways

• The Estimize consensus is calling for EPS of $0.99 on $5.34 billion in revenue, 3 cents higher than Wall Street on the bottom line and $50 million on top.
• The company is gaining traction in China and demand in all tiers of handsets has slowly stabilized.
• Intel’s emergence in the mobile space has already been a problem for Qualcomm.

The past few years has been largely mixed for the semiconductor industry, with names like NVidia (NVDA) continually crushing expectations and AMD falling short quarter after quarter. Qualcomm has fallen in the former half of the conversation, beating in each of the last 4 quarters, but still posting YoY declines in EPS and revenues for the last three. In this same time period, the stock plummeted 22.8% on waning demand for wireless telecom products and services.

Expectations have been generally subdued ahead Qualcomm’s FQ2 earnings this Wednesday. The Estimize consensus is calling for EPS of $0.99 on $5.34 billion in revenue, 3 cents higher than Wall Street on the bottom line and $50 million on top. Since its last reported, per share estimates have been cut 8% while sales have dropped 6%. Compared to a year earlier this predicts a decline on both the top and bottom line of 30% and 22%, respectively. On average, Qualcomm sees relatively little stock movement leading up and through its earnings report. 

Despite its recent blunders, Qualcomm is well positioned to bounce back in the latter half of fiscal 2016. They still control a leading market share, deriving a majority of its revenue from chip making and its patent licensing business. Demand for all tiers of handsets are slowly stabilizing carried by robust growth in emerging markets. Meanwhile, after a short break up, Samsung and Qualcomm have restored ties. At least for this year, Samsung Galaxy devices will incorporate Qualcomm Snapdragon processors. The company is also gaining traction in China, particularly in the low tier market.

While all this appears promising, Intel’s emergence in the mobile space has already been a problem. Earlier this year, Intel poached a top executive from Qualcomm to man its new mobile division. 

Photo Credit: Kārlis Dambrāns