SEOUL: Qualcomm was forced to downgrade its revenue outlook by $1bn for the year after missing out on a spot in Samsung’s latest Galaxy smartphones and because of the strength of Apple’s iPhone sales, the mobile chipmaker said on Wednesday.
Its shares fell by 2.7 per cent in after-hours trading following its second move to lower market expectations in as many quarters, even after settling an antitrust probe in China and beating forecasts in the most recent quarter.
As activist investor Jana Partners agitates for a break-up, Steve Mollenkopf, Qualcomm chief executive, told analysts in a call that there were “significant synergies in the ability to deliver products to market” between its chip business and its patent licensing arm.
“It is something that we actively evaluate and is obviously something that is on the minds of investors and something that we talk to them about, to get their perspective,” he added.
Qualcomm revenues increased 8 per cent to $6.9bn in its fiscal second quarter but net income almost halved to $1.1bn over the previous year. Earnings were 45 per cent lower at $0.63.
“While we are ahead of our expectations in the first half, we are guiding our second half lower,” Mr Mollenkopf said. This was because of “concentration at the premium tier” of smartphone sales, price competition in mid-range mobiles and the “impact of share loss” from its chips being omitted from Samsung’s latest flagship Galaxy S6 and Note 4 devices.
Qualcomm now expects revenues of $25bn-$27bn for the full year, with earnings of between $4.60 and $5.00.
“We do not believe these product cycle issues represent a long-term change in QCT’s competitive positioning,” he said, referring to the chip business, but warned that the problem may continue into next year. As a result, Qualcomm is working with an “outside expert” to review its cost structure.
