Chris Blumas discusses Broadcom and Qualcomm
Qualcomm Inc., the biggest maker of chips for smartphones, gave a solid sales forecast for the current quarter while saying the COVID-19 pandemic has reduced global demand for the devices.
Revenue will be US$4.4 billion to US$5.2 billion in the period ending in June, the San Diego-based company said Wednesday in a statement. Analysts, on average, estimated US$4.77 billion, according to data compiled by Bloomberg. Profit, excluding some items, will be 60 cents to 80 cents a share, the company said.
“Given the uncertainty caused by the COVID-19 pandemic, including the timing and pace of economic recovery, our guidance for the third quarter of fiscal 2020 is based on a planning assumption that there will be an approximate 30 per cent reduction in handset shipments relative to our prior expectations,” Qualcomm said in the statement. The reduction in smartphone shipments would hit profit by about 30 cents a share, the company said.
Investors are looking to Qualcomm’s projections for an indication of how quickly China, the world’s most populous nation, can get back on its feet after locking down much of the country earlier this year. The signs from China may provide clues for how Europe and North America will emerge from their efforts to stop the spread of the virus.
“You’re going to see improvements coming out of June, if China is any model,” Chief Executive Officer Steve Mollenkopf said in an interview.
Sales in the world’s largest market for those phones plummeted an unprecedented 22 per cent during the quarter after the COVID-19 outbreak forced brands to shut stores and created nationwide supply bottlenecks, according to Counterpoint Research.
Qualcomm said fiscal second-quarter sales increased 4.7 per cent to US$5.2 billion, landing in the middle of the company’s earlier forecast and topping estimates.
Chinese smartphone sales fall a record 22 per cent though Huawei shone
Qualcomm is the largest maker of the processors and modems that are the main components in smartphones. It has repaired a once-fractured relationship with Apple Inc. and will be returning to a role in the iPhone models likely debuting later this year. The company, however, has lost share in China as Huawei Technologies Co., the No. 2 maker of smartphones globally, has focused on its home market and built devices with its own chips.
Shares rose about four per cent in extended trading after closing at US$78.97 in New York. Qualcomm’s stock has dropped 10 per cent this year.