Steven Mollenkopf, CEO of Qualcomm
Mike Blake | Reuters
Qualcomm soared more than 13% after hours on Wednesday when the company reported third-quarter tax earnings that exceeded expectations and announced a long-term patent deal with Huawei, solving a major unanswered legal question for the company.
Here’s how he did it against Refinitiv consensus estimates:
- EPS: $ 0.86 (not GAAP), vs. $ 0.71 estimate.
- Revenue: $ 4.89 billion vs. estimated $ 4.8 billion.
However, it is difficult to compare the reported gains with analyst estimates, as the coronavirus pandemic continues to affect global economies and makes forecasting difficult.
Revenue was flat year-over-year and diluted EPS increased 8% year-over-year.
Qualcomm will greatly benefit from the 5G networks being built and issued a strong forecast for its next quarter, suggesting that 5G is beginning to become an economic force. Qualcomm sells modem chips to phone manufacturers and licenses critical patents to anyone using 5G technology.
Qualcomm said it had signed a long-term patent agreement with Huawei, which will be a major provider of 5G phones and network equipment. Qualcomm settled similar patent lawsuits with Apple, a major phone client, last year.
“Qualcomm entered into a long-term license agreement with Huawei, indicating that Qualcomm is entering a period where it has long-term license agreements with all major device manufacturers for the foreseeable future,” said Patrick Moorhead, Moor Insights analyst.
Qualcomm said it expected shipments of 5G devices to be 15% lower year-over-year in the quarter ending September, in part because a customer delayed a “global launch of 5G devices.” Qualcomm expects a decrease in non-GAAP EPS of $ 0.25 per share. Qualcomm said it still expects between 175 million and 225 million 5G phones to ship in 2020.
Qualcomm’s opinion on 5G device hours has changed since the last quarter, when Qualcomm said its customers, which include Apple, will likely continue to launch 5G phones at earlier times.
Qualcomm said it expected to report between $ 1.05 and $ 1.25 in non-GAAP. Diluted EPS, and revenue excluding certain items would be between $ 5.5 billion and $ 6.3 billion in the quarter ending in September.
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