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Qualcomm profit forecast misses estimates

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Us chipmaker Qualcomm Inc forecast third-quarter profit below analysts estimates as it expects to ship fewer chips, including those for smartphones, its biggest business.
The company’s shares dropped 3% to $50.50 in after market trading on Wednesday, having earlier oscillated between slight gains and losses.
Qualcomm, whose customers include Apple Inc and Samsung Electronics Co Ltd, said it expects chip shipments to fall 13-22% to 175-195 million in the current quarter.
The company said it expects 3G and 4G device shipments increase to 8% at the midpoint in this quarter, lower than its previous estimate of about 10% growth.
Besides slowing smartphone sales, Qualcomm is also being squeezed by competitors making chips that rival its own in price and performance, and the likes of Samsung and Apple increasingly making their own components for smartphones.
Qualcomm said it expects to earn between 90 cents and $1.00 per share in the third quarter. Analysts on average were expecting a profit of $1.02 per share, according to Thomson Reuters I/B/E/S.
Research firm Gartner expects global smartphone sales to grow in single digits in percentage terms for the first time ever this year, while Apple in January also forecast its first revenue drop in 13 years.
The uncertainty in the smartphone business seemed to show in the company’s third-quarter revenue forecast of $5.2-$6.0 billion, which implies revenue could be between 11% lower and 3% higher than the year-ago quarter.
However, while Qualcomm’s chip business is the bigger contributor to revenue, the San Diego-based company’s business of licensing its chip technology is the bigger driver of profit.
But here too the company has faced delays in closing licensing agreements in China, its biggest market.
Qualcomm, which has recently signed new deals with several companies including Lenovo, said on Wednesday it was still in talks with key Chinese smartphone makers to sign agreements.
Revenue at Qualcomm’s chipmaking division and its licensing business fell, 25% and 12% respectively, in the latest quarter, dragging down total revenue for the fourth quarter in a row.
However, the 19.5% drop, to $5.55 billion, in the three months ended March 27, was less than the nearly 23% drop analysts were expecting.

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