Qualcomm Stocks Drops After Missing on Q1 Sales Estimates

By Avi Ben Ezra Thursday, February 4, 2021

Qualcomm stock is trading about 6% lower in pre-market trading Thursday after the tech company reported lower-than-expected business results for its Q1 that ended December 27.

Qualcomm corporate headquarters.

Lack of Components Hampering Sales

The semiconductors business reported earnings of $2.17 per share on an adjusted basis to top $2.10 per share estimated from the market analysts. Sales came in at $8.23 billion, which is lower than the $8.27 billion estimated from the Street.

“We delivered an exceptional quarter, more than doubling earnings year-over-year due to strong 5G demand in handsets and growth in our RF front-end, automotive and IoT adjacencies, which drove record earnings in our chip business. We remain well positioned as the 5G ramp continues and we extend our core technology roadmap to adjacent industries,” said Steve Mollenkopf, CEO of the company.

Despite the fact that sales soared 63% year-over-year, and earnings exploded 119% over that period, Qualcomm stock fell in after-market hours Wednesday as the company confirmed it is facing semiconductor supply constraints. This trend is likely to continue into the first half of this year.

“The shortage in the semiconductor industry is across the board,” said incoming Chief Executive Officer Cristiano Amon, while the current business chief Mollenkopf told Reuters: "If we could make more, we could sell it.”

The tech business is hoping to capitalize on Huawei’s troubles as the company is supplying smartphone markers that are using Android operating systems and Qualcomm chips.

"Now with the change in the market, we have kind of 16% of the market that was not available to us before being available. So as we kind of look further out, we see this as a pretty material expansion of (addressable market) for us," Chief Financial Officer of the company, Akash Palkhiwala, said on a call.

Going forward, the company expects to record sales between $7.2 billion and $8 billion in sales for the current business quarter, which is higher than what market analysts expected. However, Qualcomm’s guidance for sales in the licensing division is now between $1.25 billion and $1.45 billion in the ongoing quarter, with the midpoint of $1.35 billion coming below analyst expectations of $1.43 billion.

Summary

Qualcomm stock fell after the company that designs and manufactures semiconductors and wireless telecommunications products reported weaker-than-expected sales for its first quarter as it is facing semiconductor supply constraints.

About the Author


Headshot for author Avi Ben Ezra

Avi Ben Ezra is the Chief Technology Officer (CTO) and Cofounder of SnatchBot and SnatchApp (Snatch Group Limited). He leads the Group’s long-term technology vision and is responsible for running all facets of the tech business which includes being the architect of the platforms and UI interfaces.

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