The San Diego, California-based company said it also expects
no further sales to Chinese telecom giant Huawei [HWT.UL] because it does not
have a license to sell 5G chips to Huawei. More broadly in China, a
slower-than-expected economic recovery weighed on orders to Qualcomm. Smartphone
shipments in the world's second-largest economy were down 5 percent in the June
quarter, Canalys data showed.
Qualcomm said its forecast also takes into account the impact
of macroeconomic headwinds, weaker global handset units, and the fact that
phone makers are using existing inventory rather than putting in fresh chip
orders.
On a conference call with investors, Chief Financial Officer
Akash Palkhiwala said Qualcomm's forecast for the rest of the year assumes no
"material revenue" from Huawei.
"As you are aware we have a 4G license for shipping
into Huawei. We do not have a 5G license, and we are not assuming any material
revenue going forward," Palkhiwala said.
The company estimated fourth-quarter revenue of $8.1 billion to $8.9 billion , while analysts polled by Refinitiv expected $8.70 billion. Qualcomm forecast a fourth-quarter adjusted earnings range with a midpoint of $1.90, in line with analysts' consensus estimate of $1.91 per share according to Refinitiv data.
Qualcomm warned of likely restructuring charges for job cuts.
"While we are in the process of developing our plans, we currently expect these actions to consist largely of workforce reductions, and in connection with any such actions we would expect to incur significant additional restructuring charge," the company said in a securities filing.
Qualcomm shares fell about 7 percent in choppy extended trading.
At a conference in May, Qualcomm CEO Cristiano Amon said he
had not seen signs of healthy consumption in China yet and the smartphone
industry recovery was "a number of quarters out."
Qualcomm rival MediaTek last week warned that phone
manufacturers are "cautious" about buying chips due to tepid end-user
demand.
Qualcomm said on Wednesday it expected the use of existing
inventory by phone makers "will be a factor through the end of the
calendar year."
Qualcomm shares fell amid a broader sell-off in tech and
chip stocks, with Philadelphia SE Semiconductor Index slipping 3.5 percent.
Analysts are expecting Apple to report its largest fiscal third-quarter revenue
drop since 2016 later this week as iPhone sales slow in the US and elsewhere.
But other chip firms are seeing different results. Shares of
Qorvo, which also supplies wireless chips to smartphone makers, rose 4 percent
in extended trading after its forecast beat analysts' expectations and CEO Bob
Bruggeworth said it had won more business with its "largest customer,"
which is Apple. Apple. NXP last week reported better-than-expected results
partly on the strength of Apple orders.
CEO Amon said the company will be supplying modem chips for
Apple's next iPhone.
Kinngai Chan, the analyst at Summit Insights Group, said Huawei
is not a large Qualcomm customer and the US company's stock declined because
its outlook is "much weaker than expectations" amid flat Android
handset sales.
Revenue at Qualcomm's mainstay handset chip business fell 25
percent to $5.26 billion in the third quarter. Adjusted overall revenue of
$8.44 billion missed estimates of $8.50 billion.
It forecast adjusted fourth-quarter earnings per share of
$1.80 and $2, compared to estimates of $1.91.
The automotive sector was a bright spot as Qualcomm seeks to
diversify beyond smartphone chips. Revenue from the sector grew 13 percent on
the increasing use of computer chips in vehicles. © Reuters
0 comments:
Post a Comment