Sluggish smartphone sales and ballooning chip inventories continued to weigh on Qualcomm’s results in the March quarter, and these headwinds don’t look like they’re going to abate anytime soon.
The company, San Diego’s largest publicly traded company, said Wednesday that it expects tough times to continue for at least a few more quarters for its business, particularly in smartphones, before hitting bottom.
Cristiano Amon, CEO, said: “Our number one priority is to invest in a diversification strategy.”
The company’s second quarter results were down double digits from the same period last year. But it was in line with Wall Street analyst expectations given persistent inflation and economic turmoil around the world.
But investors were hoping Qualcomm would show good news about the possibility of reaching a bottom and then recovering.
Qualcomm’s forecast for the June quarter called for a continued decline in earnings and earnings, which didn’t materialize.
“While we had expected a rebound in Chinese demand in the second half of the calendar year, we have not seen any meaningful evidence of a rebound and have not factored in an improvement in our assumptions,” Amon said on a conference call with analysts.
Qualcomm supplies processors for many flagship Android smartphones worldwide, including the Samsung Galaxy S23. It also supplies mobile his chips used in Apple’s iPhones. But the company is working to diversify its business beyond handsets to include connected cars, laptops, network gear and a myriad of other non-smartphone connected devices.
Qualcomm’s revenue for the quarter was $9.27 billion, down 17% from the year-ago quarter.
Adjusted earnings reached $2.4 billion, or $2.15 per share, down 33% from the prior year.
These results slightly exceeded Wall Street analysts’ consensus forecasts for earnings and were in line with earnings estimates.
But looking ahead, Qualcomm’s interim guidance fell short of analysts’ goals. The company expects earnings of $8.5 billion and adjusted earnings of $1.80 per share for the quarter.
Analysts’ consensus forecast for the June quarter was for revenue of $9.2 billion and adjusted earnings of $2.20 per share.
Qualcomm announced the results after the market closed. The stock ended normal trading and at $112.83 he fell nearly 3%. However, in long-term trading, it fell another 6.8%, and on the Nasdaq exchange he fell to $105.25.
Bernstein Research analyst Stacey Rasgon said smartphone sales were “still very weak,” with shipments in the March quarter down about 15% year-over-year.
Additionally, smartphone maker overstock spilled over into the Internet of Things market, where revenue fell 24% year-over-year to $1.4 billion.
Last quarter, Qualcomm announced it would cut its operating expenses by 5%.
The company has cut about 230 jobs in San Diego since December. The company employs about 12,500 people locally.
Chief Financial Officer Akash Palkiwala said Qualcomm hit the 5% target by cutting spending on mobile phones to fund investments in diversity in cars and the Internet of Things. intend to do something.
“As the environment continues to evolve, we will assess and implement additional cost savings opportunities to exceed our operating expense targets,” Palkiwala said.