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Qualcomm Surpasses Estimates in Q1 Despite Market Challenges

2024.02.01

 

Key Takeaways

  • Qualcomm’s Q1 earnings surpass analyst predictions with strong handset chip sales.
  • Challenges persist in IoT and VR segments, but automotive business shows growth.

Strong Performance in a Challenging Market

Qualcomm reported robust fiscal first-quarter results that exceeded analysts’ expectations, bolstered by a notable 16% increase in handset chip sales. Despite a challenging global smartphone market, Qualcomm demonstrated resilience with its latest financial performance.

 

For the quarter ending December 24, Qualcomm achieved $2.75 in adjusted earnings per share against a $2.37 expectation. Revenue reached $9.92 billion, surpassing the anticipated $9.51 billion. Qualcomm’s net income also rose significantly to $2.77 billion.

Future Outlook and Market Adaptation

Qualcomm anticipates adjusted earnings of $1.73 to $1.93 per share in the upcoming quarter, with expected revenue between $8.9 billion and $9.7 billion. The company’s CEO, Cristiano Amon, noted the stabilization of the Android market and expects global handset sales to remain steady.

 

Under Amon’s leadership, Qualcomm has expanded beyond smartphones to PCs, cars, and virtual reality headsets. However, the smartphone sector remains a significant part of its business, as highlighted by its ongoing partnership with Samsung for its Galaxy phones.

Challenges in IoT and Automotive Ventures

Despite success in handset chips, Qualcomm’s Internet of Things segment experienced a 32% decrease in sales, largely influenced by Meta’s reduced demand for VR headset chips. However, Qualcomm’s automotive business within QCT reported a 31% increase, showcasing potential in this burgeoning sector.

Licensing Business and Strategic Partnerships

Qualcomm’s licensing arm, QTL, saw a slight decline in revenue, yet the company secured a patent licensing extension with Apple until March 2027. This agreement underlines Qualcomm’s importance in the mobile technology space.

 

Reflecting its financial health, Qualcomm returned $800 million to shareholders through repurchases and paid $900 million in dividends during the quarter.

 


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