Shares of Qualcomm Inc. soared to record levels in the extended session on Wednesday after the chip company projected a huge jump in profit and revenue in the current quarter thanks to a deal with Chinese tech giant Huawei Technologies Co.
Qualcomm QCOM,
Shares rose as much as 14% after hours, after a 1.7% increase in the regular session to close at $ 93.03. The shares topped $ 106 in the after-hours session. Qualcomm’s shares briefly reached $ 100 in intraday trading on January 3, 2000, just before the dotcom crash, and have not reached triple digits since then. The stock hit a record closing high of $ 95.91 some 20 years later on January 17.
With the long-awaited patent licensing agreement with Huawei, which Qualcomm had joked about in its prior year earnings call, Qualcomm expects fiscal fourth-quarter unadjusted tax earnings of $ 2.12 to $ 2.32 per share in revenue of $ 7.3 billion at $ 8.1 billion, well ahead of analyst estimates. But as with Qualcomm’s agreement with Apple Inc. AAPL,
Recorded a year ago, those results will include the effect of the agreement with Huawei.
The Huawei deal will add about $ 1.8 billion in revenue and $ 1.38 in earnings per share, the company said. After adjusting for Huawei’s windfall, Qualcomm said it expects adjusted earnings of $ 1.05 to $ 1.25 per share in revenue of $ 5.5 billion to $ 6.3 billion. Analysts had forecast adjusted earnings of $ 1.09 per share on revenue of $ 5.76 billion.
“With the signing of the Huawei agreement, we are now entering a period where we have multi-year licensing agreements with all major original equipment manufacturers,” Steve Mollenkopf, chief executive of Qualcomm, said in the conference call.
The deal includes money owed to Qualcomm in previous quarters, as well as a new global long-term patent licensing deal, Qualcomm said.
Revenue and net revenue for the prior year period were adjusted by excluding license revenue earned in an Apple Inc. AAPL settlement,
The company reported fiscal third-quarter net income of $ 845 million, or 74 cents per share, compared to $ 2.15 billion, or $ 1.75 per share, in the same period last year. After adjusting for stock-based compensation and other effects, earnings were 86 cents a share, compared to 80 cents a share in the same period last year.
Adjusted earnings were essentially stable, $ 4 million less, compared to $ 4.89 billion last year.
Analysts surveyed by FactSet had forecast adjusted earnings of 71 cents a share on revenue of $ 4.81 billion.
Of the 29 analysts that cover Qualcomm, 18 have buy or overweight ratings, eight have hold ratings and three have sell ratings, with an average price target of $ 98.48, according to FactSet data.
At the close of Wednesday, Qualcomm shares rose 5.4% on the year, compared to a 14% gain in the PHLX SOX semiconductor index,
an 18% gain for the Nasdaq Composite Heavy Technology COMP Index,
and a 0.9% increase for the S&P 500 SPX index,
.
