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MarketScreener Homepage  >  Equities  >  Nasdaq  >  QUALCOMM Incorporated    QCOM

QUALCOMM INCORPORATED

(QCOM)
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Qualcomm Gets Boost From 5G Smartphone Sales, Licensing Payments -- Update

11/04/2020 | 05:58pm EST

By Asa Fitch

Mobile-phone chip-making giant Qualcomm Inc. expects a surge in smartphones sales next year as consumers flock to 5G-capable devices such as Apple Inc.'s new iPhone 12 that helped lift its latest results.

Qualcomm, a leading supplier of the chips powering 5G equipment, is projecting shipments of 450 million to 550 million 5G smartphones in 2021, at least double the expected total this year.

Handset sales were the big driver of the company's earnings in the latest quarter, Chief Executive Steve Mollenkopf said, adding that Qualcomm also is seeing benefits from other kinds of devices using its 5G chips. They included internet-of-things devices and networking gear, he told analysts Wednesday.

"I would argue Covid has convinced people that these technologies are now even more important than they thought they were," he said.

Telecommunications providers and analysts are betting that Apple's launch last month of several 5G-capable phones will give a boost to demand for such services. "Until now, most people have taken a wait-and-see approach to 5G. They've been waiting for 5G to get real," Verizon Communications Inc. CEO Hans Vestberg said at Apple's virtual launch event, adding the iPhone 12 "the wait is over."

Qualcomm is expected to be a major beneficiary of Apple's 5G phones. Mr. Mollenkopf said the company's sales for the quarter ended in September reflected some of that business but would be more substantial in later quarters.

The company generated $8.3 billion in revenue in the last quarter, a 73% jump from a year earlier. The figure included a one-time payment of $1.8 billion from a prior licensing settlement with Chinese phone giant Huawei Technologies Co.

Even stripping out the Huawei agreement, sales rose 35% from the prior year. The sale of the newest 5G smartphones have been a bright spot for handset makers in a market that otherwise has been lackluster since the pandemic hit.

Qualcomm posted $2.58 in earnings per share for the most recent quarter, more than quadrupling the year-ago figure because of the Huawei payment. Earnings were also up when excluding that payment.

The results came in above Wall Street expectations. Analysts expected $5.9 billion in sales excluding the Huawei payment and per-share earnings of $2.23, according to a FactSet survey.

The San Diego-based company's shares rose more than 10% in after-hours trading Wednesday.

The strong earnings come as Qualcomm emerges from several years of legal challenges over how it licenses patents on key telecommunications technologies, which some competitors and regulators have called unfair. Apple and the Federal Trade Commission both sued Qualcomm in 2017, alleging it leveraged its position as a crucial chip supplier to get more favorable terms on its licenses.

Apple and Qualcomm reached a settlement of their dispute last April, while the company has all but won its FTC case. A federal appeals court last month declined to revisit a ruling in Qualcomm's favor, leaving an appeal to the Supreme Court as the FTC's only recourse.

Anticipated demand for 5G products is contributing to a wave of acquisitions reshaping America's chip industry. Marvell Technology Group Ltd. last month said it would buy Inphi Corp., in part for its 5G activities. It is the latest in a series of blockbuster deals this year that also has seen Nvidia Corp. and Advanced Micro Devices Inc. propose big acquisitions. Intel Corp. Chief Executive Bob Swan said last month the company may use some of the funds from the sale of its flash-memory manufacturing business to South Korea's SK Hynix Inc. to invest in 5G.

Qualcomm forecast per-share earnings of $1.67 to $1.87 on sales of $7.8 billion to $8.6 billion for the current quarter -- also beating Wall Street's projections.

Write to Asa Fitch at asa.fitch@wsj.com

(END) Dow Jones Newswires

11-04-20 1757ET

Stocks mentioned in the article
ChangeLast1st jan.
ADVANCED MICRO DEVICES, INC. 1.38% 92.79 Delayed Quote.1.18%
APPLE INC. 1.61% 139.07 Delayed Quote.3.15%
INPHI CORPORATION -1.50% 175.45 Delayed Quote.9.34%
INTEL CORPORATION -9.29% 56.66 Delayed Quote.25.37%
MARVELL TECHNOLOGY GROUP LTD -1.63% 52.62 Delayed Quote.10.69%
NVIDIA CORPORATION -1.12% 548.5 Delayed Quote.5.04%
QUALCOMM INCORPORATED -1.41% 162.42 Delayed Quote.8.15%
SK HYNIX, INC. -2.28% 128500 End-of-day quote.8.44%
VERIZON COMMUNICATIONS INC. 0.35% 57.47 Delayed Quote.-2.52%
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Financials (USD)
Sales 2021 30 324 M - -
Net income 2021 6 880 M - -
Net Debt 2021 1 796 M - -
P/E ratio 2021 26,4x
Yield 2021 1,60%
Capitalization 184 B 184 B -
EV / Sales 2021 6,12x
EV / Sales 2022 5,54x
Nbr of Employees 41 000
Free-Float 99,9%
Chart QUALCOMM INCORPORATED
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Technical analysis trends QUALCOMM INCORPORATED
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TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 29
Average target price 162,81 $
Last Close Price 162,42 $
Spread / Highest target 23,1%
Spread / Average Target 0,24%
Spread / Lowest Target -31,0%
EPS Revisions
Managers and Directors
NameTitle
Steven M. Mollenkopf Chief Executive Officer & Director
Cristiano R. Amon President & Chief Executive Officer-Elect
Mark D. McLaughlin Chairman
Akash Palkhiwala Chief Financial Officer & Executive Vice President
James H. Thompson Chief Technology Officer
Sector and Competitors
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NVIDIA CORPORATION5.04%339 522
INTEL CORPORATION25.37%230 210
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TEXAS INSTRUMENTS5.29%158 630