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Qualcomm (QCOM) Beats Q4 Earnings and Revenues Estimates

Qualcomm Inc. QCOM reported strong financial results for the fourth quarter of fiscal 2017 (ended Sep 24, 2017), wherein both the top and the bottom line outpaced the Zacks Consensus Estimate. Consequently, in  after-market trade on Nasdaq, the stock price of Qualcomm was up 1.01%. 

Net Income

On a GAAP basis, quarterly net income came in at $168 million or 11 cents per share compared with $1,599 million or $1.07 in the year-ago quarter. Adjusted earnings per share (excluding special items) were 92 cents, well ahead of the Zacks Consensus Estimate of 81 cents.

QUALCOMM Incorporated Price, Consensus and EPS Surprise

 

QUALCOMM Incorporated Price, Consensus and EPS Surprise | QUALCOMM Incorporated Quote

Revenues

Quarterly total revenues of $5,905 million decreased 4.6% year over year. However, it surpassed the Zacks Consensus Estimate of $5,780.5 million.

Segment-wise, Qualcomm Code Division Multiple Access (CDMA) Technologies (QCT) contributed $4,650 million revenues compared with $4,124 million in the prior-year quarter. EBT (earnings before tax) margin was 21% compared with 17% in the prior-year quarter. Qualcomm Technology Licensing (QTL) generated $1,213 million, reflecting a sharp decline of 35.6% year over year. EBT margin was 68% compared with 84% in the prior-year quarter. The disappointing performance of QTL segment is primarily due to ongoing royalty dispute with Apple Inc. AAPL and another licensee.

Chipset Statistics

During fiscal fourth-quarter 2017, Qualcomm shipped approximately 220 million CDMA-based MSM (Mobile Station Modem) chipsets, reflecting an increase of 4.1% year over year. This also came in above the midpoint of 215 million, which was the fourth-quarter chipset outlook given by management earlier.

Operating Metrics

Quarterly operating income came in at $333 million compared with $1,804 million in the year-ago quarter. Quarterly operating margin was a mere 5.6% compared with 29.2% in the prior-year quarter. Quarterly EBT was $434 million compared with $1,960 million in the year-ago quarter. EBT margin was 7% compared with 16% in the prior-year quarter.

Cash Flow

During the fourth quarter of fiscal 2017, Qualcomm generated $2,417 million of cash from operating activities compared with $2,084 million in the prior-year quarter. Free cash flow in the reported quarter was $2,155 million compared with $1,934 million in the prior-year quarter.

Liquidity

At the end of fiscal 2017, Qualcomm had $37,308 million of cash, cash equivalents and marketable securities compared with $18,648 million at the end of fiscal 2016. Total outstanding debt was $21,893 million at the end of the reported quarter compared with $10,903 million at the end of fiscal 2016. The debt-to-capitalization ratio at the end of fiscal 2017 was 0.39 compared with 0.24 at the end of fiscal 2016.

Stockholders’ Wealth

During the fourth quarter of fiscal 2017, the company returned nearly $1.156 billion to stockholders. This included $841 million (57 cents per share) of cash dividend and another $315 million through repurchases of 6.1 million shares of common stock.

First-Quarter Fiscal 2018 Outlook

Revenues for the first quarter of fiscal 2018 are estimated in the range of $5.5 – $6.3 billion. GAAP earnings per share are estimated between 63 cents and 73 cents. Non-GAAP earnings per share are estimated between 85 cents and 95 cents. Qualcomm is expected to ship 220 – 240 million MSM chipsets in the ongoing quarter.

Latest Developments

Qualcomm’s updated Snapdragon processors and applications look impressive and will aid the company in retaining leadership in the global wireless baseband chipset market. Qualcomm is teaming up with Verizon Communications Inc. VZ and Novatel Wireless for 5G NR mmWave technology trial. This marks Qualcomm’s leadership in 5G, chipset market and mobile connectivity. Qualcomm is extending cash tender offer for its pending NXP Semiconductors N.V. NXPI deal. Meanwhile, the ongoing $1-billion lawsuit dispute with tech giant Apple is getting bitter, which is affecting the company’s margins.

We believe such mixed prospects complement Qualcomm’s current Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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QUALCOMM Incorporated (QCOM): Free Stock Analysis Report
 
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NXP Semiconductors N.V. (NXPI): Free Stock Analysis Report
 
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