Investors Want To Hear More Before Jumping on Qualcomm Stock

Paul Ausick

Qualcomm Inc. (NASDAQ: QCOM) reported first fiscal quarter 2020 results after markets closed on Wednesday. The chipmaker posted adjusted diluted earnings per share (EPS) of $0.99 and revenues of $5.08 billion. In the first quarter of 2019, Qualcomm reported EPS of $1.20 on revenues of $4.84 billion. The consensus analysts’ estimates called for EPS of $0.85 and $4.83 billion in revenue.

Qualcomm said it paid $710 million in cash dividends in the quarter and repurchased 9.2 million shares at a total cost of $762 million.

In its outlook, Qualcomm guided second-quarter 2020 revenues to a range of $4.9 to $5.7 billion with diluted adjusted EPS in a range of $0.50 to $0.65. The company expects revenue in its licensing division to fall in a range of $1 to $1.2 billion and its chip business to generate $3.9 to $4.5 billion in sales. The company also forecasts chip shipments of 125 to 145 million units.

In the first quarter, licensing revenue totaled $1.4 billion and chip revenue totaled $3.62 billion on shipments of 155 million units. Chip revenue was down 3% year over year while licensing revenue rose 38%. Pre-tax profit in chips fell 20% to $479 million while pre-tax earnings in licensing rose 72% to $1.02 billion.

Analysts have forecast second-quarter EPS at $0.86 on revenues of $5.08 billion. For the year, analysts are looking for EPS of $4.19 and sales of $21.97 billion.

CEO Steve Mollenkopf said:

Our strong fiscal first quarter financial performance reflects a significant inflection point for Qualcomm as we begin to realize the benefits from the ramp of 5G.

Licensing revenue and profits are booming; chip sales not so much, and the second-quarter EPS forecast testifies to that. Analysts may have expected a boost from shipments of 5G chips that the company is not expecting to occur. The conference call should offer more information.

In Wednesday’s after-hours session, shares traded up about 0.7% at $91.55 in a 52-week range of $49.91 to $96.17. The stock’s 12-month price target was $99.56 before results were announced.