Qualcomm share price: Company’s revenue forecast disappoints

Qualcomm share price: Company’s revenue forecast disappoints
Written by:
Farquar McIntosh
7th November 2013
Updated: 21st October 2019

iNVEZZ.com, Thursday, November 7: Qualcomm Inc (NASDAQ:QCOM), the world’s largest manufacturer of processors for smartphones, yesterday reported double-digit increases in fiscal fourth-quarter revenue and net income, but its revenue forecast for the current fiscal year suggested that the company’s growth might be slowing down. A shift in consumer preferences towards less expensive phones, especially in Asia, has raised concerns over the company’s profitability.

The revenue forecast disappointed investors, sending the Qualcomm share price four percent lower to $66.92 in yesterday’s extended trading on the Nasdaq. The stock had closed up one percent at $69.74.
Trade these shares now through Hargreaves Lansdown from £5.95 per deal.
**Double-digit growth**
Qualcomm saw a double-digit growth for a 13th consecutive quarter, with Q4 revenue increasing year-on-year by 33 percent to $6.48 billion and net income up 18 percent to $1.50 billion, or 86 cents a share, from a year earlier. That compares with an analysts’ average forecast of 95 cents per share on revenue of $6.35 billion.

For the full fiscal year, the company posted revenue of $24.87 billion, up 27 percent from the previous year. Net income came in at $6.85 billion, rising 12 percent year on year.
Dr. Paul E. Jacobs, Chairman and CEO of Qualcomm, commented: “I am very pleased with our record financial performance this year as we delivered revenues of $25 billion, up 30% versus last year. Our technologies underpin the global growth of wireless data, and our semiconductor solutions are used across the industry’s flagship smartphones.”

**Deceleration**
Qualcomm’s annual sales have more than doubled since 2010, but the company’s forecast for next year signaled that the explosive growth may be facing a slowdown next year. The chipmaker said that revenue in the next fiscal year would be $26 billion to $27.5 billion, compared with an average analyst estimate of $27.5 billion. At the mid-point of that range revenue growth would be around eight percent, a slowdown from annual growth of more than 25 percent for the past three fiscal years. The San Diego-based tech giant forecast that sales in the first fiscal quarter ending December would be in range of $6.3 billion to $6.9 billion, less than the $7.01-billion average forecast from analysts surveyed by Bloomberg.

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One factor that could hurt Qualcomm’s growth is the increasing demand for cheaper smartphone models, which is prompting the company’s customers to place more orders for less-expensive components.
Bloomberg quoted Stacy Rasgon, an analyst at Sanford C. Bernstein & Co, as saying: “They’re seeing a bit of a slowdown in chipsets.” She continued: “This wasn’t a bad report, but it’s definitely not good.”

Despite this, the company’s CEO said that revenue and profit would continue to grow at double-digit rates over the next five years.
“We’re investing in a bunch of new opportunities and there’s a lot of stuff still coming,” he said, as quoted by Bloomberg. “I don’t think we believe that it’s over by any stretch.”
**As of Wednesday buy Qualcomm shares at $67.22**
**As of Wednesday sell Qualcomm shares at $66.82**
Trade these shares now through Hargreaves Lansdown from £5.95 per deal.
Prices can go up and down meaning you can get back less than you invest. This is not advice. Dealing services provided by Hargreaves Lansdown.

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