Qualcomm Plays Down Expectations For Sales Growth, Despite 5G Rollout
Qualcomm Inc. has played down expectations for sales growth next quarter, claiming the profits from the introduction of smartphones capable of using 5G will take longer than expected.
The chipmaker, which has tied its success to roll out of 5G networks, gave a sales forecast for the second fiscal quarter that exceeded analysts’ estimates.
But revenue will hardly change in the following three-month period ending in June, Chief Financial Officer Akash Palkhiwala said on a conference call after earnings were reported on Wednesday, according to Bloomberg.
‘We expect the next inflection point with the launch of additional 5G flagship handsets to be in the fourth quarter and extend into fiscal 2021,’ Palkhiwala said on the call.
‘We expect our third fiscal quarter performance to be in line with our second fiscal quarter.’
Analysts predicted Qualcomm’s revenue would increase with each quarter throughout the year. Shares, which initially increased in extended trading, fell around 2 per cent on the remarks.
Consumers have been keeping handsets longer as drastic technology advances slow down.
Qualcomm alongside the rest of the industry argue that 5G is set to reverse that trend. While 5G networks are starting to roll out, the majority of the demand won’t begin until the launch of the new smartphones in September, Palkhiawala said.
Revenue will be $4.9 billion to $5.7 billion (US) in the fiscal second quarter, ending in March, the San Diego-based company said in a statement according to the publication.
Data compiled by Bloomberg shows that analysts predicted on average $5.1 billion. Fiscal first quarter sales and profit also exceeded estimates.
The company also factored in possible disruption from the coronavirus in China – the biggest market for smartphones – on consumer, Palkhiwala said.
Qualcomm shares declined to a low of $86.68 in extended trading in New York. The stock has now gained 79 per cent over the past 12 months.
During the first quarter, net income dropped to $925 million – 80 cents a share – from $1.07 billion – 87 cents a share – 12 months earlier.
Revenue also rose 4.9 per cent to $5.08 billion in the period, which ended on 29 December.
Analysts had predicted $4.83 billion in sales.