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Qualcomm Earnings: Opportunity On Any Drop

Summary

Qualcomm will post second quarter fiscal 2016 earnings tomorrow after market close.

A revenue beat could be on the cards, driven by Snapdragon 820 adoption and new license agreements.

I believe shares are poised for profit booking post earnings.

Qualcomm (NASDAQ:QCOM) is set to release its second quarter fiscal 2016 earnings on Wednesday, April 20, after the closing bell. Analysts on average expect that the company's EPS will come in at $0.96 on revenues of $5.34 billion. In the year-ago period, the company's EPS was $1.40 on revenues of $6.9 billion. This implies that analysts are modeling more than 30% YoY decline in EPS and more than 20% YoY decline in revenues.

Snapdragon 820: Qualcomm's Key Revenue Driver

2015 was a difficult year for Qualcomm, as it was facing antitrust regulations across the world. The company's high-margin licensing business suffered the most due to these antitrust issues. The problem got bigger in China, where Qualcomm failed to sign new licensing deals.

In addition, its Snapdragon 810 chip was an utter failure. Samsung (OTC:SSNLF) ditched Snapdragon 810 and started using its own Exynos chips for Galaxy S6 smartphones. However, what some analysts failed to understand is that Qualcomm remained the top smartphone chip seller even during this difficult time. Its market share reached 42% in 2015.

Qualcomm is finally out of the woods. Although the company has projected softer revenue and profit guidance for the fiscal second quarter, it has successfully managed to stabilize its international operations. The company officially launched the...


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