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Will Top-Line Contraction Dent Qualcomm's (QCOM) Q2 Earnings?
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Qualcomm Incorporated (QCOM - Free Report) is set to report second-quarter fiscal 2023 results on May 3, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 0.85%. It pulled off a trailing four-quarter earnings surprise of 3.75%, on average. The company is expected to have recorded lower year-over-year revenues due to falling demand for its smartphone chips amid global uncertainty.
Factors at Play
During the to-be-reported quarter, Qualcomm introduced Snapdragon 7+ Gen 2 for mobile platform to boost performance and ensure greater power efficiency. Leveraging Snapdragon X62 5G Modem-RF System, it provides greater bandwidth connectivity and up to 4.4 Gbps download speed. The 5G/4G Dual-Sim Dual Active (DSDA) technology lets users utilize two SIM cards to differentiate their personal and professional interactions.
The newly-released series ensures a more realistic gaming experience for end users and the Auto Variable Rate Shading (VRS) delivers greater power efficiency and enhanced capabilities. Integrated AI improves visual quality, gaming scenes and graphics and boosts performance by 40%. It also leverages Qualcomm Sensing Hub, an efficient AI processor that provides contextual awareness and enhances the audio. This is likely to be reflected in the upcoming quarterly results.
However, Qualcomm anticipates a rapid deterioration in demand for its handset chips, as high inventory combined with low demand situations have forced vendors to reduce shipments drastically. Rising geopolitical tension in Europe and Asia is fueling global instability and adding to the macroeconomic challenges. In addition, softness in demand in China due to the adverse economic impact of the coronavirus pandemic is likely to have affected unit volumes. These are likely to have hurt the company’s fiscal second-quarter revenues.
For the March quarter, the Zacks Consensus Estimate for revenues is pegged at $9,080 million, indicating a decline from the year-ago quarter’s reported figure of $11,164 million. Adjusted earnings per share are pegged at $2.16, suggesting a contraction from $3.21 recorded in the year-earlier quarter.
Key Developments in Q2
In the fiscal second quarter, Qualcomm inked an agreement with Iridium Communications Inc. to enable satellite-based messaging services in Android phones. The deal will enable customers to stay connected through satellite communication facilities even when there is no Wi-Fi or cellular data connectivity. The service is likely to be available in select regions in premium Android smartphones from the second half of 2023.
Dubbed Snapdragon Satellite, the service will be accessible in devices that utilize the second-generation Snapdragon 8 mobile platform. These include laptops, tablets, IoT devices and connected vehicles. The collaboration with Qualcomm will likely help Iridium to “serve the smartphone industry horizontally” and gradually extend this service to other verticals.
Earnings Whispers
Our proven model does not predict an earnings beat for Qualcomm for the fiscal second quarter. 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 -0.33%, with the former pegged at $2.15 and the latter at $2.16. 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 #3.
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 MKS Instruments, Inc. (MKSI - Free Report) is +46.43% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on May 3.
The Earnings ESP for Keysight Technologies, Inc. (KEYS - Free Report) is +0.09% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on May 16.
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Will Top-Line Contraction Dent Qualcomm's (QCOM) Q2 Earnings?
Qualcomm Incorporated (QCOM - Free Report) is set to report second-quarter fiscal 2023 results on May 3, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 0.85%. It pulled off a trailing four-quarter earnings surprise of 3.75%, on average. The company is expected to have recorded lower year-over-year revenues due to falling demand for its smartphone chips amid global uncertainty.
Factors at Play
During the to-be-reported quarter, Qualcomm introduced Snapdragon 7+ Gen 2 for mobile platform to boost performance and ensure greater power efficiency. Leveraging Snapdragon X62 5G Modem-RF System, it provides greater bandwidth connectivity and up to 4.4 Gbps download speed. The 5G/4G Dual-Sim Dual Active (DSDA) technology lets users utilize two SIM cards to differentiate their personal and professional interactions.
The newly-released series ensures a more realistic gaming experience for end users and the Auto Variable Rate Shading (VRS) delivers greater power efficiency and enhanced capabilities. Integrated AI improves visual quality, gaming scenes and graphics and boosts performance by 40%. It also leverages Qualcomm Sensing Hub, an efficient AI processor that provides contextual awareness and enhances the audio. This is likely to be reflected in the upcoming quarterly results.
However, Qualcomm anticipates a rapid deterioration in demand for its handset chips, as high inventory combined with low demand situations have forced vendors to reduce shipments drastically. Rising geopolitical tension in Europe and Asia is fueling global instability and adding to the macroeconomic challenges. In addition, softness in demand in China due to the adverse economic impact of the coronavirus pandemic is likely to have affected unit volumes. These are likely to have hurt the company’s fiscal second-quarter revenues.
For the March quarter, the Zacks Consensus Estimate for revenues is pegged at $9,080 million, indicating a decline from the year-ago quarter’s reported figure of $11,164 million. Adjusted earnings per share are pegged at $2.16, suggesting a contraction from $3.21 recorded in the year-earlier quarter.
Key Developments in Q2
In the fiscal second quarter, Qualcomm inked an agreement with Iridium Communications Inc. to enable satellite-based messaging services in Android phones. The deal will enable customers to stay connected through satellite communication facilities even when there is no Wi-Fi or cellular data connectivity. The service is likely to be available in select regions in premium Android smartphones from the second half of 2023.
Dubbed Snapdragon Satellite, the service will be accessible in devices that utilize the second-generation Snapdragon 8 mobile platform. These include laptops, tablets, IoT devices and connected vehicles. The collaboration with Qualcomm will likely help Iridium to “serve the smartphone industry horizontally” and gradually extend this service to other verticals.
Earnings Whispers
Our proven model does not predict an earnings beat for Qualcomm for the fiscal second quarter. 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 -0.33%, with the former pegged at $2.15 and the latter at $2.16. 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 #3.
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:
Skyworks Solutions, Inc. (SWKS - Free Report) is set to release quarterly numbers on May 8. It has an Earnings ESP of +0.45% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for MKS Instruments, Inc. (MKSI - Free Report) is +46.43% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on May 3.
The Earnings ESP for Keysight Technologies, Inc. (KEYS - Free Report) is +0.09% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on May 16.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.