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Will High Licensing Revenues Aid Qualcomm (QCOM) Q1 Earnings?
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Qualcomm Incorporated (QCOM - Free Report) is scheduled to report first-quarter fiscal 2021 results on Feb 3, after the closing bell. In the fiscal first quarter, it is likely to have recorded a year-over-year growth in revenues from the Qualcomm Technology Licensing (“QTL”) segment owing to long-term patent settlement deals.
Factors at Play
The QTL segment generates revenues from licenses from various patent rights used in the manufacture and sale of wireless products. It also garners revenues from royalties based on global sales by licensees of products incorporating or using Qualcomm's intellectual property rights.
During the fiscal first quarter, Qualcomm is likely to have recorded higher revenues from the settlement agreement with China-based Huawei Technologies in order to resolve previous disputes related to its license agreement that expired on Dec 31, 2019. The company also entered into a new long-term, global patent license agreement, including cross-license rights to certain Huawei’s patents, covering sales beginning Jan 1, 2020. Notably, the company boasts more than 110 5G licensing agreements driven by an unrivalled patent portfolio and ecosystem collaborations, facilitating the rapid global adoption of 5G.
The segment’s revenues are likely to be further buoyed by the favorable court ruling that reversed an adverse antitrust ruling against it. The decision by the U.S. Ninth Circuit Court of Appeals validated Qualcomm’s patent licensing business and reinforced the fairness of the competitive marketplace. Additionally, the higher court vacated an injunction against Qualcomm that mandated the chipmaker to change its intellectual property practices and redo its licensing deals with firms.
Overall Expectations
The Zacks Consensus Estimate for revenues from QTL segment is pegged at $1,713 million, indicating an improvement from $1,404 million reported in the year-ago quarter. Segment income before taxes is pegged at $1,327 million, implying a rise from $1,017 million reported in the prior-year quarter.
For the first quarter of fiscal 2021, Qualcomm expects GAAP revenues of $7.8-$8.6 billion. The Zacks Consensus Estimate for the same is pegged at $8,299 million, indicating a 63.5% increase from $5,077 million reported in the year-earlier quarter. Management anticipates non-GAAP earnings of $1.95-$2.15 per share. The consensus mark for earnings is currently pegged at $2.10 per share. Qualcomm recorded non-GAAP earnings of 99 cents per share in the prior-year quarter.
Earnings Whispers
Our proven model does not predict an earnings beat for Qualcomm this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.05%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Qualcomm currently has a Zacks Rank #2.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
The Earnings ESP for Cambium Networks Corporation (CMBM - Free Report) is +6.75% and it carries a Zacks Rank of 3. The company is set to report quarterly numbers on Feb 18.
The Earnings ESP for Arista Networks, Inc. (ANET - Free Report) is +0.76% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 18.
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Will High Licensing Revenues Aid Qualcomm (QCOM) Q1 Earnings?
Qualcomm Incorporated (QCOM - Free Report) is scheduled to report first-quarter fiscal 2021 results on Feb 3, after the closing bell. In the fiscal first quarter, it is likely to have recorded a year-over-year growth in revenues from the Qualcomm Technology Licensing (“QTL”) segment owing to long-term patent settlement deals.
Factors at Play
The QTL segment generates revenues from licenses from various patent rights used in the manufacture and sale of wireless products. It also garners revenues from royalties based on global sales by licensees of products incorporating or using Qualcomm's intellectual property rights.
During the fiscal first quarter, Qualcomm is likely to have recorded higher revenues from the settlement agreement with China-based Huawei Technologies in order to resolve previous disputes related to its license agreement that expired on Dec 31, 2019. The company also entered into a new long-term, global patent license agreement, including cross-license rights to certain Huawei’s patents, covering sales beginning Jan 1, 2020. Notably, the company boasts more than 110 5G licensing agreements driven by an unrivalled patent portfolio and ecosystem collaborations, facilitating the rapid global adoption of 5G.
The segment’s revenues are likely to be further buoyed by the favorable court ruling that reversed an adverse antitrust ruling against it. The decision by the U.S. Ninth Circuit Court of Appeals validated Qualcomm’s patent licensing business and reinforced the fairness of the competitive marketplace. Additionally, the higher court vacated an injunction against Qualcomm that mandated the chipmaker to change its intellectual property practices and redo its licensing deals with firms.
Overall Expectations
The Zacks Consensus Estimate for revenues from QTL segment is pegged at $1,713 million, indicating an improvement from $1,404 million reported in the year-ago quarter. Segment income before taxes is pegged at $1,327 million, implying a rise from $1,017 million reported in the prior-year quarter.
For the first quarter of fiscal 2021, Qualcomm expects GAAP revenues of $7.8-$8.6 billion. The Zacks Consensus Estimate for the same is pegged at $8,299 million, indicating a 63.5% increase from $5,077 million reported in the year-earlier quarter. Management anticipates non-GAAP earnings of $1.95-$2.15 per share. The consensus mark for earnings is currently pegged at $2.10 per share. Qualcomm recorded non-GAAP earnings of 99 cents per share in the prior-year quarter.
Earnings Whispers
Our proven model does not predict an earnings beat for Qualcomm this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.05%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
QUALCOMM Incorporated Price and EPS Surprise
QUALCOMM Incorporated price-eps-surprise | QUALCOMM Incorporated Quote
Zacks Rank: Qualcomm currently has a Zacks Rank #2.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
T-Mobile US, Inc. (TMUS - Free Report) is set to release quarterly numbers on Feb 4. It has an Earnings ESP of +11.17% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Cambium Networks Corporation (CMBM - Free Report) is +6.75% and it carries a Zacks Rank of 3. The company is set to report quarterly numbers on Feb 18.
The Earnings ESP for Arista Networks, Inc. (ANET - Free Report) is +0.76% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 18.
Legal Marijuana: An Investor’s Dream
Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
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