Qualcomm Delivers on Earnings Ahead of and Into NXP Semiconductor Acquisition

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Qualcomm Inc. (NASDAQ: QCOM) had already made a serious change by announcing the acquisition of NXP Semiconductors (NASDAQ: NXPI) as an accretive deal that will seriously diversify its reliance upon mobile chips and processors for smartphones. Now Qualcomm has released its earnings and guidance.

It is important to understand that the stock has risen handily ahead of an into that NXP Semi deal. That NXP deal will make guidance and comparable earnings very difficult to deal with as we get further into 2017.

Qualcomm reported earnings per share of $1.28 on $6.18 billion in revenues. That is revenue growth of 13% versus a year ago and up 2% sequentially.

The company’s cash and cash equivalents was $32.4 billion at the end of the fourth quarter, versus $30.9 billion a year ago and versus $31.0 billion in the prior quarter. It is important to keep in mind that Qualcomm announced a definitive agreement to acquire NXP Semiconductors N.V. for a total cash consideration of $38 billion, and the company will be using a large portion of cash and taking on debt to fund the deal.

Qualcomm offered up guidance of $1.12 to $1.22 in adjusted earnings per share and sees revenues of $5.7 billion to $6.5 billion. That is a revenue decrease of 1% to an increase of 13% projected. Earnings growth on a non-GAAP basis would be 15% to 26% on a per share basis.

Steve Mollenkopf, CEO of Qualcomm, said of the quarter:

Our fiscal fourth quarter EPS was above the high end of our expectations, reflecting new license agreements in China and strong chipset shipments. We are forecasting continued growth of global 3G/4G device shipments in calendar year 2017, led by growing demand in emerging regions. We are well positioned to extend our mobile technology leadership and footprint into attractive growth opportunities, accelerated by our recently announced agreement to acquire NXP.

Shares of Qualcomm were down 1.8% at $67.09 ahead of earnings and the after-hours report was up 0.4% at $67.38 in the initial reaction. Qualcomm’s 52-week range was $42.24 to $71.62 and its consensus analyst price target is $70.14.

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