Qualcomm’s Stock Drops 9% Following Q3 Earnings Report, Reflecting Decline in Phone Chip Sales

In an interview on Squawk Box at the WEF in Davos, Switzerland on January 17th, 2023, Amon Cristiano, the CEO of Qualcomm, addressed the recent challenges faced by the chipmaker.

Shares of Qualcomm fell approximately 9% in pre-market trading on Thursday, following the company’s announcement of weaker-than-expected quarterly revenue and guidance. Qualcomm continues to experience declining sales for smartphone chips, which is impacting its financial performance.

Although Qualcomm’s third-quarter earnings exceeded expectations, with adjusted earnings per share of $1.87 compared to a Refinitiv consensus estimate of $1.81 per share, the company’s revenue fell short of analysts’ predictions. The adjusted revenue was $8.44 billion, slightly lower than the expected $8.5 billion consensus estimate.

Additionally, Qualcomm provided lower guidance for the upcoming quarter, with projected earnings of $1.8 to $2 per share and sales ranging from $8.1 billion to $8.9 billion. This guidance is lower than the market’s expectations of $1.91 earnings per share and $8.7 billion in revenue.

As a result of these underwhelming financial results, Qualcomm’s net income dropped 52% compared to the same quarter last year, from $3.73 billion to $1.8 billion.

Qualcomm’s heavy reliance on high-end and low-end Android phone sales is contributing to its challenges. Handset chip sales declined by 25% year over year, reaching $5.26 billion.

Deutsche Bank analyst Ross Seymore downgraded Qualcomm to a hold in a note to clients on Thursday. He also lowered his price target from $130 to $120, expressing concerns about the company’s growth potential.

Overall, Qualcomm’s recent financial performance has raised doubts about its ability to bounce back in the near future.

Contributions to this report were made by CNBC’s Kif Leswing and Michael Bloom.