Qualcomm Guidance Misses the Mark: What’s Next for the Chipmaker?

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Source: Qualcomm Inc.

Qualcomm Inc. (NASDAQ:QCOM) closed Wednesday’s regular session up 1.07 percent at $69.74 per share, but fell as much as 4 percent in post-market trading after reporting fiscal fourth-quarter results.

GAAP revenues increased 33 percent on the year (up 4 percent sequentially) to $6.48 billion, beating the mean analyst estimate of $6.34 billion. GAAP earnings increased 18 percent on the year (down 5 percent sequentially) to 86 cents per diluted share — adjusted earnings increased 18 percent on the year (up 2 percent sequentially) to $1.05 per diluted share, missing the mean analyst estimate of $1.08 per share.

For the fiscal year, GAAP revenues increased 30 percent to $24.87 billion, beating the mean analyst estimate of $24.73 billion. Adjusted earnings increased 22 percent on the year to $4.51 per diluted share, missing the mean analyst estimate of $4.54 per share. Total MSM chip shipments increased 35 percent on the year (+10 percent sequentially) to 190 million units.

The results themselves were not bad, but Qualcomm’s fourth-quarter forecast failed to impress investors. Fiscal first-quarter revenues are expected to grow between 5 and 15 percent to between $6.3 and $6.9 billion, the top of which is below the current mean analyst estimate of $6.99 billion. Adjusted earnings are expected to decrease between 5 and 13 percent to between $1.10 and $1.20 per diluted share, the top of which also misses the current mean analyst estimate of $1.29 per share.

MSM chip shipments are expected to increased between 7 and 15 percent to between 195 million and 2010 million. Total reported device sales are expected to increased between 8 and 19 percent to a range between $57.5 billion and $63.5 billion.

Qualcomm, deeply entrenched in the mobile and tablet market, is a major supplier of modems and processors to Apple (NASDAQ:AAPL) and Samsung (SSNLF.PK). Combined, Apple and Samsung account for about 40 percent of all smartphone shipments about about 50 percent of tablet shipments. As a major supplier, this gives Qualcomm a fairly good grasp on the market for the devices.

Qualcomm Chair and CEO Paul Jacobs said alongside the earnings release that, “Our technologies underpin the global growth of wireless data, and our semiconductor solutions are used across the industry’s flagship smartphones. Looking forward, we expect continued strong growth of 3G and 3G/4G multimode devices around the world, particularly in China with the anticipated launch of LTE. Qualcomm remains well-positioned from a growth standpoint, and we expect double-digit compound annual growth rates for both revenues and earnings per share over the next five years.”

Currently, Qualcomm’s fiscal 2014 guidance is for revenue in a range between $26 billion and $27.5 billion. Earnings (including the impact of approximately $4 billion worth of share repurchases) are expected in a range between $4.95 and $5.15 per share. The firm provides some estimates on 3G and 4G device shipments, broken down by region.

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