The after-hours move suggests investors are pricing the guidance rather than the quarter, with the gap between a firm revenue outlook and a softer earnings range pointing to margin pressure as the key risk. A beat that fails to lift the stock tends to weigh on near-term sentiment across the broader chip complex, particularly for names leveraged to smartphone demand. Asian handset and semiconductor supply-chain stocks may take their cue from how Qualcomm trades at the US open. A sharper sell-off in the regular session would signal that the capex surprise is being read as a drag on returns rather than an investment in growth.
—
Qualcomm cleared the bar for the quarter, but a light earnings outlook and a jump in spending left investors looking past the beat.
Summary:
- Fiscal Q4 revenue of about $10.4 billion beat expectations of around $10.1 billion
- Adjusted EPS of $2.17 edged past the $2.16 consensus
- Handset revenue came in at about $5.1 billion, close to half the total
- Q1 revenue guidance of $10.4 billion to $11.2 billion sits above estimates near $10.5 billion
- Q1 adjusted EPS guidance of $2.15 to $2.35 has a midpoint below forecasts
- Full-year capex of about $2.5 billion compared with expectations near $1.9 billion; shares fell around 2% after hours
Qualcomm beat Wall Street forecasts for its fiscal fourth quarter, but its shares slipped in after-hours trade as investors focused on profit guidance that came in a little light and capital spending that ran well ahead of expectations.
The chipmaker reported adjusted revenue of about $10.4 billion, ahead of the roughly $10.1 billion analysts had expected, a beat of a little over 3%. Adjusted earnings per share came in at $2.17, a cent above the $2.16 consensus. Handset revenue, the company’s largest business, was about $5.1 billion, or close to half of the quarter’s total.
The outlook was more mixed. Qualcomm guided first-quarter revenue to a range of $10.4 billion to $11.2 billion, putting the midpoint at around $10.8 billion, comfortably above market expectations of roughly $10.5 billion. Its adjusted EPS guidance of $2.15 to $2.35, however, implies a midpoint of $2.25, below analyst estimates in the high $2.20s to low $2.30s.
That pairing of stronger expected sales with softer expected earnings suggests the pressure in the coming quarter is more likely to sit in costs or margins than in demand. It is the kind of split that tends to draw scrutiny even when the headline numbers beat.
Full-year capital expenditure of about $2.5 billion added to that focus. The figure was around a third higher than the roughly $1.9 billion analysts had pencilled in. Heavier investment can underpin future growth, but it also raises the bar for returns at a time when investors are already questioning the profit outlook.
Shares were down about 2% in after-hours trade, a modest move given the beat on both revenue and earnings, and one that indicates the market was looking past the quarter itself to the guidance.
Attention now turns to management’s explanation of what is driving the step-up in spending and how it sees margins developing, along with how the stock trades once the regular session opens. With handsets still accounting for roughly half of revenue, Qualcomm’s results remain closely tied to the health of the smartphone cycle.
This article was written by Eamonn Sheridan at investinglive.com.