Wireless-chip leader Qualcomm late Wednesday beat Wall Street's targets for its fiscal third quarter but came up short with its guidance for the current quarter. QCOM stock fell in extended trading.
The San Diego-based company earned an adjusted $2.96 a share on sales of $10.94 billion in the quarter ended June 26. Analysts polled by FactSet expected Qualcomm earnings of $2.89 a share on sales of $10.86 billion. On a year-over-year basis, Qualcomm earnings rose 54% while sales increased 36%.
For the current quarter, Qualcomm predicted adjusted earnings of $3.15 a share on sales of $11.4 billion. That's based on the midpoint of its guidance. However, Wall Street had predicted Qualcomm earnings of $3.30 a share on sales of $12 billion in the fiscal fourth quarter.
Qualcomm said macroeconomic headwinds and a reduction in the forecast for global handset sales caused it to reduce its September-quarter outlook. Those factors will cut its earnings per share by about 20 cents in the period, the company said.
QCOM Stock Drops After Report
"When you look at our guidance, even with that impact, we are growing EPS 24% on a year-over-year basis," Chief Financial Officer Akash Palkhiwala told Investor's Business Daily. "And that's faster than many of our peers who have very limited consumer exposure."
In after-hours trading on the stock market today, QCOM stock dropped 3.3% to 148.41. During the regular session Wednesday, QCOM stock rose 2.3% to close at 153.42.
Consumers have become more cautious about spending amid rising inflation and economic turmoil, Palkhiwala said. And that's impacting their willingness to buy new smartphones, he said.
Meanwhile, Qualcomm's automotive and Internet of Things chip sales remain strong, he said.
In other news, major customer Samsung Electronics has extended its patent license agreement for 3G, 4G, 5G and upcoming 6G mobile technology through the end of 2030. Samsung also agreed to expand its use of Qualcomm Snapdragon products for future premium Samsung Galaxy products, including smartphones, PCs, tablets and extended reality headsets.
Qualcomm Ranks No. 1 In Group
QCOM stock ranks first out of 34 stocks in IBD's fabless semiconductor industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 98 out of 99.
IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
