Has Qualcomm Righted the Ship?

Paul Ausick

Qualcomm Inc. (NASDAQ: QCOM) reported fourth fiscal quarter and full-year 2019 results after markets closed on Wednesday. The chipmaker posted adjusted diluted earnings per share (EPS) of $0.78 and revenues of $4.8 billion. In the third quarter of 2018, Qualcomm reported EPS of $0.80 on revenues of $4.9 billion. The consensus analysts’ estimates called for EPS of $0.71 and $4.7 billion in revenue.

For the fiscal year, Qualcomm reported EPS of $3.54 and revenues of $19.4 billion compared to EPS of $3.62 and revenues of $22.6 billion in the prior year. Analysts were looking for EPS of $3.47 and revenues of $19.3 billion.

In its outlook, Qualcomm guided first-quarter 2020 revenues to a range of $4.4 to $5.2 billion, compared to the $4.86 billion analysts were looking for. Estimated technology licensing (QTL) revenues for the quarter total $1.3 billion to $1.5 billion. Adjusted diluted EPS is forecast at $0.80 to $0.90 while analysts are expecting $0.83 in EPS.

In the 2019 fiscal year, Qualcomm revenues included $450 million in QTL royalties ($0.32 per share) paid by Huawei under an interim agreement that expired at the end of the third quarter. Qualcomm did not record any Huawei revenue in the fourth quarter.

Adjusted EPS for the fiscal year included a tax benefit of $0.45 per share and the Huawei payment.

Qualcomm paid cash dividends totaling $711 million ($0.62 per share) in the quarter. For the full year, the company paid $2.97 billion in dividends and repurchased $1.79 billion worth of stock. The company has $7.1 billion remaining in a $30 billion share buyback program announced in its fourth fiscal quarter of 2018.

CEO Steve Mollenkopf said:

We delivered a strong quarter, with Non-GAAP earnings per share above the high end of our guidance range, primarily on solid performance in our QTL segment. We exit the fiscal year having successfully executed on our strategic priorities: helping to drive the commercialization of 5G globally, completing a number of important anchor license agreements and executing well across our product roadmap. Our technology and inventions leave us extremely well positioned as 5G accelerates in 2020.

Better-than-expected quarterly and full-year results have boosted investors’ spirit. In the after-hours session, shares traded up about 4.6% at $88.53 in a 52-week range of $49.10 to $90.34. The stock’s 12-month price target was $79.35 before the results were announced.