Qualcomm Posts Great Earnings, Guidance Not So Much

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Qualcomm Inc. (NASDAQ: QCOM) has reported earnings of $1.31 in earnings per share, or $1.44 in adjusted earnings per share, for its fiscal third quarter. The mobile chip maker reported that revenues rose by 9% to a rate of $6.81 billion. Both were handily above estimates, and that puts all eyes on guidance. Net income was up 42% at $2.24 billion.

Thomson Reuters had estimates of $1.22 in earnings per share $6.52 billion in revenue. This was projected to be up about 20% from the $1.03 in earnings per share a year ago, but on a revenue gain of only 4.5%. Qualcomm had previously offered guidance for revenues to be in a range of $6.2 to $6.8 billion  and for its adjusted earnings per share to come in at $1.15 to $1.25.

We were looking closely at news on that buyback accelerating. Qualcomm spent $1.35 billion through repurchases of 17.0 million shares this last quarter. That was versus $1 billion for share buybacks to repurchase some 13.4 million shares of its common stock one quarter ago. Another boost is that Qualcomm is expecting to spend a minimum of $1 billion to repurchase its own share sin the coming quarter.

The cash and cash equivalents at the end of the last quarter came to $32.7 billion, up from $32.1 billion one quarter earlier.

Qualcomm said that its key MSM shipments were 225 million units, up 31 percent from a year ago and up 20 percent sequentially. The company said that licensees in China are not fully complying with their contractual obligations. In short, annual shipment guidance is expected to be a tad lower.

For the coming quarter, Qualcomm sees $1.20 to $1.35 EPS on revenue of $6.5 to $7.4 billion. Thomson Reuters has estimates of $1.39 EPS and $7.15 billion. Again, that looks lower than what the bulls wanted to see. MSM shipments are projected to be 190 million.

Qualcomm shares were up only seven cents at $81.60 at the close after hitting a 52-week high of $81.97 on Wednesday. The shares were down over 3% at $79.01 in the after-hours trading session.

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