What happened
Actions of Qualcomm (NASDAQ: QCOM) It jumped on Thursday after the semiconductor company reported its third-quarter fiscal results. Qualcomm exceeded analyst estimates across the board, and disclosed a patent license agreement with Huawei. The stock rose approximately 11.9% at 11:20 amEDT.
And that
Qualcomm reported third-quarter revenue of $ 4.89 billion, roughly stable from the same period last year, after retreating revenue recognized last year from settlement agreements with Apple and its contract manufacturers. Chip business revenue grew 7% to $ 3.81 billion, while licensing segment revenue decreased 19% to $ 1.04 billion. Total revenue was approximately $ 100 million higher than analysts expected.
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Non-GAAP (adjusted) earnings per share reached $ 0.86, up from $ 0.80 in the prior year period and $ 0.15 more than the average analyst estimate. Pre-tax earnings in the chip business increased 20%, while EBT in the licensing business sank 28%.
Qualcomm entered into a long-term global patent licensing agreement with Huawei in July. The company expects to recognize $ 1.8 billion of revenue in the fiscal fourth quarter related to the deal, which covers Huawei sales since the start of 2020.
Now what
Qualcomm expects to produce adjusted revenue, which excludes revenue from the Huawei patent agreement, between $ 5.5 billion and $ 6.3 billion in the fiscal fourth quarter. This includes chip revenue between $ 4.3 billion and $ 4.9 billion, and license revenue between $ 1.2 billion and $ 1.4 billion. The company sees adjusted EPS between $ 1.05 and $ 1.25.
Qualcomm’s guidance assumes a 15% decrease in phone shipments due to COVID-19, along with a delay of an unnamed global 5G flagship phone, presumably as Apple’s upcoming iPhone 5G. Reports have indicated that mass production of Apple’s new iPhones is behind schedule.
Including Thursday’s recovery, Qualcomm’s actions have essentially erased all of its losses caused by a pandemic. The chip company’s shares are now just short of its 52-week high.
