Qualcomm pops on chipmaker's earnings and revenue beat

Aseem — Wed, 06 Nov 2024 22:19:33 +0000

Qualcomm CEO Cristiano Amon speaks at the Computex forum in Taipei, Taiwan, June 3, 2024.

Ann Wang | Reuters

Qualcomm reported fourth-quarter earnings on Wednesday that beat Wall Street expectations for earnings and revenue, and the company guided to a strong December quarter.

The shares rose 10% in extended trading at one point before falling to a gain of about 4%.

Here’s how the company did versus Refinitiv consensus expectations for the quarter ending Sept. 29:

Earnings per share: $2.69, adjusted $2.56 expected
Revenue: $10.24 billion versus $9.90 billion expected

Qualcomm said it expects revenue in the current quarter of between $10.5 billion and $11.3 billion, with the midpoint of that range beating LSEG consensus expectations of $10.59 billion.

The company reported $2.92 billion in net income, or $2.59 per share, a sharp jump from last year’s $1.49 billion, or $1.23 per share. Qualcomm reported $33.19 billion in total revenue in its fiscal 2024, a 9% increase from 2023.

Qualcomm’s fortunes have historically been tied to the smartphone industry, where the company provides a range of chips to handset makers, including system-on-a-chip processors, modems, and antennas. The company makes the chip at the heart of most high-end Android devices, and many lower-end phones as well. Qualcomm also sells modems and related chips to Apple for its iPhones, and last year said its contract for 5G chips ran through 2026.

Qualcomm reported a 12% increase in handset chip sales to $6.1 billion, in line with FactSet estimates. Qualcomm introduced its high-end chip for 2025, called Snapdragon 8 Elite, in October.

“In handsets we delivered greater than 20% year-over-year growth in Android revenues,” said Qualcomm CFO Akash Palkhiwala on a call with analysts.

Under CEO Cristiano Amon, the company has diversified away from being a smartphone supplier and has introduced and invested heavily in producing chips for PCs, cars, and industrial machines.

“We will continue to transform Qualcomm from a wireless communications company into a connected computing company for the age of AI,” Qualcomm CEO Cristiano Amon said on an earnings call with analysts.

Qualcomm has also made efforts to brand itself as a leader in AI, having developed smartphone chips with specialized parts for machine learning since 2017. But unlike Nvidia, the company doesn’t produce the kind of graphics processors for data centers that are used for big AI programs like OpenAI’s ChatGPT.

The automotive business grew 86% on an annual basis to $899 million in sales. Qualcomm says it has billions of dollars in business with automakers currently in its development pipeline, and highlighted it was the fifth consecutive quarter of growth. Qualcomm said that it expected automotive sales in the current quarter to rise 50% on an annual basis.

The company’s “internet of things” business includes both chips for industrial purposes as well as the chips Meta uses in its Quest handsets and Ray-Ban Smart Glasses. It also includes the new business selling chips for laptops running Microsoft Windows. The division reported $1.68 billion in revenue, a 22% increase from a year earlier.

Qualcomm’s chip business, including its handset, automotive, and other chips, which together is reported as QCT, saw sales rise 18% during the quarter to $7.37 billion in total.

The company’s profitable technology licensing business, QTL, reported $1.52 billion in revenue, a 21% increase over the same period last year.

Qualcomm said its board had approved $15 billion in additional buybacks. During the fourth quarter, it repurchased $1.3 billion worth of shares and paid out $947 million in dividends.

WATCH: CNBC’s full interview with Qualcomm CEO Cristiano Amon

Qualcomm Said to Have Approached Intel About a Takeover in Recent Days

Ashish Singh — Sat, 21 Sep 2024 04:53:35 +0000

Qualcomm has in recent days approached Intel to explore a potential acquisition of the troubled chipmaker, a source familiar with the situation said on Friday, in what could be a transformational deal in the sector but faces many hurdles.

Qualcomm CEO Cristiano Amon is personally involved in the negotiations to acquire five-decade-old Intel, according to the source who was briefed on the matter. Another person familiar with the situation said Amon has been actively examining various options for a deal for the company.

Earlier this month, Reuters reported that Qualcomm explored the possibility of acquiring portions of Intel’s design business and that its PC design unit was of particular interest. Qualcomm executives were examining Intel’s entire portfolio of businesses.

The conversations with Intel are at an early stage. The San Diego-based company has not made a formal offer for Intel, according to third person familiar with the matter.

The sources requested anonymity as the discussions are confidential.

Intel declined to comment. Qualcomm did not immediately respond to a Reuters request for comment.

Intel’s shares closed up 3.3%, while Qualcomm fell 2.9%.

The approach by Qualcomm comes at a moment of weakness for Intel, which was once the most valuable chipmaker in the world, but whose shares have lost nearly 60% of their value since the start of the year.

A deal, should it go ahead, would likely invite scrutiny from antitrust regulators in the United States, China and Europe. Qualcomm may be required to divest parts of Intel in order to gain regulatory approvals.

A bid would mark the biggest takeover attempt in the technology industry since Broadcom sought to buy Qualcomm for $142 billion in 2018, before President Donald Trump nixed the tie-up, citing national security risks.

Reuters could not determine how Qualcomm, which has a market value of $188 billion, would finance a bid for Intel, which is valued at $122 billion, including its debt.

Qualcomm has roughly $13 billion in cash, according to recent company filings.

It is also unclear how Qualcomm would handle the takeover of Intel’s contract manufacturing business. To build chips with an atomic level of precision, Intel has invested hundreds of billions of dollars over decades on its fabrication process and amassed tens of thousands of engineers to do it.

Qualcomm has never operated a chip factory, or fab, and currently contracts the likes of Taiwan Semiconductor Manufacturing Co and uses designs and other technology supplied by Arm Holdings.

Intel’s Woes

Once the dominant force in chipmaking, Intel ceded its manufacturing edge to Taiwanese rival TSMC and failed to produce a widely desired chip for the generative AI boom capitalized on by Nvidia and AMD.

Intel has been attempting to turn its business around by focusing on AI processors and creating a chip contract manufacturing business, known as a foundry.

As part of a memo from CEO Pat Gelsinger, Intel released a series of announcements that stemmed from a board meeting last week. Gelsinger and other executives presented a plan to shave off businesses and restructure the company, Reuters has previously reported.

The company plans to pause construction on factories in Poland and Germany, and reduce its real estate holdings. Intel also said it had reached a deal to make a custom networking chip for Amazon.com’s AWS.

The Wall Street Journal reported on Qualcomm’s talks with Intel earlier on Friday.

cristiano amon – TheNewsHub

Qualcomm pops on chipmaker's earnings and revenue beat

Qualcomm Said to Have Approached Intel About a Takeover in Recent Days