Qualcomm rises after earnings, but sees 30% drop in phone shipments in future

April 29, 2020

Qualcomm reported second-quarter earnings on Wednesday.
The stock was up after hours, in addition to a nearly 5% rise during trading on Wednesday.
Qualcomm says it now predicts a roughly 30% reduction in handset shipments compared to its previous expectations in the quarter ending in June.

The stock was up more than 3% after hours, in addition to a nearly 5% rise during trading on Wednesday.

Here’s how it did:

EPS: $0.88
Revenue: $5.21 billion

Wall Street had anticipated earnings per share of $0.78 on revenue of $5.025 billion based on Refinitiv consensus estimates. However, it’s difficult to compare reported earnings to analyst estimates for Qualcomm’s Q2, as the coronavirus pandemic continues to hit global economies and makes earnings impact difficult to assess.

Revenue for Qualcomm was up 7% year-over-year and diluted EPS was up 14% year-over-year.

Qualcomm said that the pandemic reduced demand for phones in the second quarter about 21% compared to its previous expectations and on a year-over-year basis. It also warned of lower phone shipments in the quarter ending in June, as the pandemic has chilled economies around the world.

“Our guidance for the third quarter of fiscal 2020 being based on a planning assumption that there will be an approximate 30% reduction in handset shipments relative to our prior expectations,” according to a note in Qualcomm’s press release.

Qualcomm shipped 129 million modem chips during the quarter, and predicts to sell between 125 million and 145 million in the June quarter. Qualcomm is the leading maker of 5G chips and has a lot of related patents, so its results shed some light into how the rollout of 5G networks is tracking around the world.

The chip maker is also being closely watched because it sells parts and licenses technology to most of the world’s top smartphone makers.

In its third fiscal quarter, Qualcomm is expecting earnings per share of between $0.60 and $0.80, about 30 cents less than it would have been due to the coronavirus pandemic. It also expects revenue in the June quarter to land between $4.4 billion and $5.2 billion.