Saturday, July 28, 2012

Qualcomm Earnings Review: Solid Quarter, Disappointing Guidance

Qualcomm reported QE June 2012 financial results on Wednesday, July 18

Qualcomm reported solid growth YoY for total revenues, net income, and earnings per share. The outlook for next quarter was disappointing and more of the same - flat to slow growth QoQ.

The concern is negatively trending margins: gross margin for equipment and services, operating margin, and net margin. These peaked at QE June 2009, QE March 2011, and QE December 2010, respectively. The net margin calculation excludes gain on sale from discontinued operations at QE March 2012. Some other adjustments were not made.

On a FY basis, excluding the QE March 2012 one-time $0.44 GAAP gain on sale of discontinued operations focuses on the core business. The FY 2012 GAAP EPS guidance ($2.97 to $3.03) is then an increase over FY 2011 GAAP EPS ($2.53) of +15% to +17%. This is solid, but lower than originally projected. The FY 2012 ends next QE September 2012.

Metric, QoQ Change, YoY Change
Total Assets: $42.45 billion, +2%, +21%
Total Revenues: $4.63 billion, -6%, +28%
Net Income: $1.21 billion, -46%, +17%
Earnings per Share: $0.69, -46%, +13%

Qualcomm QE September 2012 Business Outlook
• GAAP & Non-GAAP Revenues: $4.45B - $4.85B
• GAAP EPS: $0.62 - $0.68
• Non-GAAP EPS: $0.78 - $0.84

“Adoption of 3G and 3G/4G technologies continues around the world, driving strong year over year growth in our chipset and licensing businesses this quarter,” said Dr. Paul E. Jacobs, chairman and CEO of Qualcomm. “Looking forward, our growth estimates for 3G/4G device shipments in calendar 2012 have moderated slightly, and we now expect the demand profile of the calendar year to be more back-end loaded as new devices are launched for the holiday season. Although our outlook for semiconductor volumes in the fiscal fourth quarter has been reduced from our prior expectations, we are ramping supply of our 28 nanometer chipsets to help enable what we expect to be a strong December quarter for our semiconductor business.”


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