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Qualcomm (QCOM) Q1 Earnings In Line, Revenues Fall Short
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Qualcomm Inc. (QCOM - Free Report) reported mixed financial results for the first quarter of fiscal 2017 (ended Dec 31, 2016) wherein the bottom line matched the Zacks Consensus Estimate but the top line missed the same.
Qualcomm has been coming up with updated Snapdragon processors and applications to retain its leadership position in the global wireless baseband chipset market. The company’s recent deal to buy the Netherlands-based chipset giant NXP Semiconductors (NXPI - Free Report) should help it to generate more revenues in the years ahead and diversify its business model in the broader global semiconductor market. The company’s active involvement in the production of chipsets for the 5G standard and partnership with U.S. telecom behemoths like Verizon Communications Inc. (VZ - Free Report) and Ericsson (ERIC - Free Report) for the same, have driven its growth. Moreover, Qualcomm’s widening presence in adjacent opportunities, including automotive, networking, and mobile computing also bode well.
However, the company faces severe competitive threats from its closest rival, Intel Corporation (INTC - Free Report) , which has been redesigning its chipsets for the mobile computing market. We believe such mixed activities might have been behind Qualcomm’s current Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Net Income
On a GAAP basis, quarterly net income came in at $682 million or 46 cents per share compared with $1,498 million or 99 cents in the year-ago quarter. Meanwhile, adjusted (excluding special items) earnings per share were $1.06, exactly the same as the Zacks Consensus Estimate.
Revenue
Total quarterly revenue of $5,999 million increased 3.87% year over year, but failed to beat the Zacks Consensus Estimate of $6,106 million. Segment-wise, Qualcomm Code Division Multiple Access (CDMA) Technologies contributed $4,101 million to revenues in the first quarter of fiscal 2017 compared with $4,096 million in the prior-year quarter and reported quarterly EBT margin of 18%. Qualcomm Technology Licensing generated $1,811 million in revenues, up 13% year over year, and reported quarterly EBT margin of 85%.
Chipset Statistics
During the fiscal first quarter, Qualcomm shipped approximately 217 million CDMA-based MSM chipsets, reflecting a decrease of 10% year over year. The company shipped 331–335 million 3G/4G handsets in the reported quarter, up 8% year over year. The average selling price of a 3G/4G handset with an in-built Qualcomm chipset during the quarter was around $186–$192, down 4% year over year.
Operating Metrics
Quarterly operating income came in at $778 million compared with $1,685 million in the year-ago quarter. Quarterly operating margin was 13% compared with 29.2% in the prior-year quarter. Quarterly adjusted EBT was $870 million compared with $1,710 million in the year-ago quarter.
During the first quarter of fiscal 2017, the company returned nearly $1.2 billion to stockholders, which includes $784 million (53 cents per share) of cash dividends and another $444 million through repurchases of 6.6 million shares of common stock.
Cash Flow
During the first quarter of fiscal 2017, Qualcomm generated $1.4 billion of cash from operating activities versus $2.7 billion in the prior-year quarter.
Liquidity
At the end of first-quarter fiscal 2017, Qualcomm had $29.8 billion of cash, cash equivalents and marketable securities compared with $30.6 billion a year ago and $32.4 billion at the end of the fourth quarter of fiscal 2016. Total outstanding debt was $9,935 million at the end of fiscal first quarter 2017 compared with $10,008 million at the end of fourth-quarter fiscal 2016.
QUALCOMM Incorporated Price, Consensus and EPS Surprise
Second-quarter fiscal 2017 revenues are estimated in the range of $5.5–$6.3 billion. GAAP earnings per share are estimated between $0.89 and $0.99. Non-GAAP earnings per share are estimated between $1.15 and $1.25. Qualcomm is expected to ship 165–185 million MSM chipsets in the ongoing quarter.
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Qualcomm (QCOM) Q1 Earnings In Line, Revenues Fall Short
Qualcomm Inc. (QCOM - Free Report) reported mixed financial results for the first quarter of fiscal 2017 (ended Dec 31, 2016) wherein the bottom line matched the Zacks Consensus Estimate but the top line missed the same.
Qualcomm has been coming up with updated Snapdragon processors and applications to retain its leadership position in the global wireless baseband chipset market. The company’s recent deal to buy the Netherlands-based chipset giant NXP Semiconductors (NXPI - Free Report) should help it to generate more revenues in the years ahead and diversify its business model in the broader global semiconductor market. The company’s active involvement in the production of chipsets for the 5G standard and partnership with U.S. telecom behemoths like Verizon Communications Inc. (VZ - Free Report) and Ericsson (ERIC - Free Report) for the same, have driven its growth. Moreover, Qualcomm’s widening presence in adjacent opportunities, including automotive, networking, and mobile computing also bode well.
However, the company faces severe competitive threats from its closest rival, Intel Corporation (INTC - Free Report) , which has been redesigning its chipsets for the mobile computing market. We believe such mixed activities might have been behind Qualcomm’s current Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Net Income
On a GAAP basis, quarterly net income came in at $682 million or 46 cents per share compared with $1,498 million or 99 cents in the year-ago quarter. Meanwhile, adjusted (excluding special items) earnings per share were $1.06, exactly the same as the Zacks Consensus Estimate.
Revenue
Total quarterly revenue of $5,999 million increased 3.87% year over year, but failed to beat the Zacks Consensus Estimate of $6,106 million. Segment-wise, Qualcomm Code Division Multiple Access (CDMA) Technologies contributed $4,101 million to revenues in the first quarter of fiscal 2017 compared with $4,096 million in the prior-year quarter and reported quarterly EBT margin of 18%. Qualcomm Technology Licensing generated $1,811 million in revenues, up 13% year over year, and reported quarterly EBT margin of 85%.
Chipset Statistics
During the fiscal first quarter, Qualcomm shipped approximately 217 million CDMA-based MSM chipsets, reflecting a decrease of 10% year over year. The company shipped 331–335 million 3G/4G handsets in the reported quarter, up 8% year over year. The average selling price of a 3G/4G handset with an in-built Qualcomm chipset during the quarter was around $186–$192, down 4% year over year.
Operating Metrics
Quarterly operating income came in at $778 million compared with $1,685 million in the year-ago quarter. Quarterly operating margin was 13% compared with 29.2% in the prior-year quarter. Quarterly adjusted EBT was $870 million compared with $1,710 million in the year-ago quarter.
During the first quarter of fiscal 2017, the company returned nearly $1.2 billion to stockholders, which includes $784 million (53 cents per share) of cash dividends and another $444 million through repurchases of 6.6 million shares of common stock.
Cash Flow
During the first quarter of fiscal 2017, Qualcomm generated $1.4 billion of cash from operating activities versus $2.7 billion in the prior-year quarter.
Liquidity
At the end of first-quarter fiscal 2017, Qualcomm had $29.8 billion of cash, cash equivalents and marketable securities compared with $30.6 billion a year ago and $32.4 billion at the end of the fourth quarter of fiscal 2016. Total outstanding debt was $9,935 million at the end of fiscal first quarter 2017 compared with $10,008 million at the end of fourth-quarter fiscal 2016.
QUALCOMM Incorporated Price, Consensus and EPS Surprise
QUALCOMM Incorporated Price, Consensus and EPS Surprise | QUALCOMM Incorporated Quote
Second-Quarter Fiscal 2017 Outlook
Second-quarter fiscal 2017 revenues are estimated in the range of $5.5–$6.3 billion. GAAP earnings per share are estimated between $0.89 and $0.99. Non-GAAP earnings per share are estimated between $1.15 and $1.25. Qualcomm is expected to ship 165–185 million MSM chipsets in the ongoing quarter.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>