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Earnings Results: Qualcomm stock rises as record results, outlook blow past Street estimates

Qualcomm Inc. shares rallied in the extended session Wednesday after the chip maker’s record quarterly results and strong outlook blew past all Wall Street estimates.

Qualcomm
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+1.20%

reported second-quarter net income of $2.93 billion, or $2.57 a share, compared with $1.76 billion, or $1.53 a share, in the year-ago period. The chip maker reported adjusted earnings, which exclude stock-based compensation expenses and other items, of $3.21 a share, compared with $1.90 a share in the year-ago period. Total revenue for the second quarter rose to a record $11.16 billion from $7.94 billion in the year-ago period.

Analysts surveyed by FactSet estimated earnings of $2.95 a share, based on Qualcomm’s forecast of $2.80 to $3 a share, and revenue of $10.63 billion, based on Qualcomm’s revenue forecast of $10.2 billion to $11 billion. Shares surged more than 5% after hours following a 1.2% rise to close the regular session at $135.10.

Not only did sales get a boost from growth products but were anchored by big gains in the company’s so-called “mature” business, Akash Palkhiwala, Qualcomm’s chief financial officer, told MarketWatch in an interview. Handset chip sales soared 56% to $6.34 billion from a year ago, while the Street expected $5.91 billion.

“We’re not just gaining share, which we did especially at Samsung where they decided to use our chip rather than their own internal chip for [their S22 smartphone],” Palkhiwala told MarketWatch. “We’re also gaining share in terms of content, just that chips are becoming more complex and fewer people make those chips, and that plays to our advantage.”

RF front-end sales rose 28% to $1.16 billion compared with an expected $1.12 billion, auto chip sales grew 41% to $339 million compared with the Street’s $282.4 million, and Internet of Things, or IoT, sales surged 61% to $1.72 billion versus a $1.61 billion Street view.

Qualcomm reported revenue from its CDMA technologies, or QCT, segment of $9.55 billion, a 52% gain from a year ago. Analysts had estimated $8.9 billion, based on the company’s forecast of $8.7 billion to $9.3 billion. QCT includes handset and RF chips as well as chips for autos and IoT.

Revenue from Qualcomm’s technology licensing, or QTL, segment slipped 2% to $1.58 billion for the first quarter, but were still above Wall Street estimates of $1.55 billion, based on a company forecast of $1.45 billion to $1.65 billion.

In its forecast for the third quarter, Qualcomm said it expects adjusted earnings of $2.75 to $2.95 a share on revenue of $10.5 billion to $11.3 billion, while analysts estimated $2.64 a share on revenue of $10.02 billion.

Over the past 12 months, Qualcomm shares are off 2.1%, compared with a 10.3% decline for the PHLX Semiconductor Index 
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 a flat S&P 500 index 
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  and an 11.4% drop in the tech-heavy Nasdaq Composite Index 
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