QUALCOMM, Inc. (NASDAQ: QCOM) stock rose over 4.6% on July 26th, 2018 (as of 10:42 AM GMT-4; Source: google finance) after the company posted better than expected results for the third quarter 2018 and stock buyback plan.
QCOM in the third quarter of FY 18 has reported the adjusted earnings per share of $1.01, beating the analysts’ estimates for the adjusted earnings per share of $0.71 as per Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 4 percent to $5.60 billion in the third quarter of FY 18, beating the analysts’ estimates for revenue by 7.67%. The majority of Qualcomm’s revenue comes from its CDMA Technologies business, which makes chips for phones and other devices. In the fiscal third quarter, that unit produced $4.09 billion in revenue, below the $4.11 billion FactSet analyst consensus. Qualcomm’s patent business generated $1.47 billion in revenue, higher than the $976 million consensus estimate. During the quarter, QCOM announced an artificial intelligence research group and the Snapdragon 850 chip for ‘always connected’ Windows 10 PCs.
Meanwhile, after almost a year it was first reported Apple could drop Qualcomm modems in future products, Qualcomm has finally acknowledged the rumor and is gearing up for the loss. QCOM expects Apple to dump Qualcomm in favor of “competitors’ modems” for its next product launch. Qualcomm has for several years supplied Apple’s modems, but Intel has provided upwards of half of Apple’s chips for iPhones in recent years, amid licensing disputes between Apple and Qualcomm
On the other hand, QCOM walked away from a $44 billion deal to buy NXP Semiconductors after not securing Chinese regulatory approval, becoming a high profile victim of a bitter Sino-U.S. trade spat. There was no word from China’s State Administration for Market Regulation (SAMR), which is the antitrust regulator reviewing the deal, after the deadline for the deal to expire passed. The collapse of the deal is likely to aggravate tensions between Washington and Beijing, damage China’s image as an antitrust regulator and discourage deals that need Chinese approval to go through. While the collapse of the deal will remove a big overhang from Qualcomm’s stock, it will leave it on the hook to find new ways to turbocharge growth as global phone sales slow. For now, QCOM will buy back $30 billion in shares if the deal fails, making good on a promise to reassure investors.
For its fiscal fourth quarter, QCOM expects earnings of 75 cents to 85 cents a share, excluding certain items, on $5.1 billion to 5.9 billion in revenue. Analysts had expected earnings of 76 cents and sales of $5.45 billion, according to Thomson Reuters.