Qualcomm Inc., the largest maker of smartphone processors, gave a disappointing sales and profit forecast for the current period, signaling that demand for mobile devices remains sluggish.
(Bloomberg) — Qualcomm Inc., the largest maker of smartphone processors, gave a disappointing sales and profit forecast for the current period, signaling that demand for mobile devices remains sluggish.
Revenue will be $8.1 billion to $8.9 billion in the fiscal third quarter, Qualcomm said Wednesday in a statement, falling well short of the $9.25 billion average analyst estimate. That sent the shares sliding in late trading.
The outlook shows the challenge Qualcomm faces in navigating an industrywide downturn. Weak demand for phones has led to a buildup in handset chips — the company’s main source of revenue. Chief Executive Officer Cristiano Amon has promised investors that once phone makers have worked through their inventory, the orders will bounce back. But that’s taking longer than feared.
In the longer run, San Diego-based Qualcomm is looking to decrease its reliance on smartphones by selling more chips for cars, networking, computing and wearable devices.
“As we navigate this challenging environment, we remain focused on the critical factors we can control to emerge stronger from this downturn — our leading technology road map, best-in-class product portfolio, strong customer relationships and operational efficiencies,” Amon said in the statement. “Our top priority remains to execute our diversification strategy and invest in areas that drive long-term value.”
Excluding certain items, third-quarter earnings will about $1.70 to $1.90 a share. That compares with an average projection of $2.20.
Qualcomm fell more than 4% in extended trading following the announcement. The stock had increased 2.6% this year through the close, trailing broader gains by semiconductor-related shares.
In the fiscal second quarter, which ended March 26, revenue fell 17% to $9.3 billion, Qualcomm said. It posted a profit, minus certain items, of $2.15 a share, matching estimates.
Handset-related sales fell 17% to $6.1 billion, compared with an average estimate of $5.3 billion. Automotive revenue jumped 20% from a year earlier to $447 million, topping projections. And sales from connected devices were in line with estimates at $1.39 billion.
Qualcomm gets a large portion of its sales from Chinese manufacturers that serve domestic customers — the world’s biggest buyers of chips. Pandemic lockdowns in that country restrained consumer spending, and Qualcomm said there’s been no quick rebound yet.
The company’s main product is the processor that runs many of the world’s best-known phones. It also sells the modem chips that connect Apple Inc.’s iPhone to high-speed data networks. An additional chunk of Qualcomm’s profit comes from licensing the fundamental technology that underpins all modern mobile networks — fees that phone makers pay whether they use Qualcomm-branded chips or not.
(Updates with divisional sales in ninth paragraph.)
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