Breaking a string of 14 consecutive quarters of double-digit growth, mobile processing juggernaut Qualcomm released fiscal Q2 results on Wednesday that fell shy of analyst expectations.
The San Diego, Calif.-based chip maker reported a second quarter net income of $1.96 billion, or $1.14 per share (statement).
Non-GAAP earnings were $1.31 per share on a revenue of $6.37 billion, up 4 percent from the year-ago period.
Wall Street was looking for second quarter non-GAAP earnings of $1.22 a share on revenue of $6.48 billion.
Qualcomm shares dropped 3.4 percent to $78.42 in after-hours trading.
Qualcomm chief executive Steve Mollenkopf said in prepared remarks he was pleased with the outcome of the quarter:
We delivered another solid quarter, driven by demand for our leading multimode 3G/LTE chipset solutions and record licensing revenues. Looking forward, we are pleased to be raising our earnings per share guidance for the fiscal year. We continue to see increasing demand for our industry-leading chipsets and strong growth in calendar year 2014 of 3G/4G smartphones around the world.
For the fiscal year 2014, the Qualcomm raised its earnings outlook to a range of $4.37 to $4.57 per share from its prior guidance range of $4.33 to $4.53 per share. Adjusted earnings are projected in a range of $5.05 to $5.25 per share, up from its previous guidance range of $5.00 to $5.20 per share.
Wall Street expected fiscal year earnings of $5.13 a share on revenue of $26.79 billion.
As for MSM chip shipments, Qualcomm shipped off 188 million units, up 9 percent year-over-year and down 12 percent sequentially. For total reported device sales Qualcomm took in approximately $66.5 billion, up 9 percent year-over-year and 8 percent sequentially.
Last quarter, Qualcomm's revenues rose 10 percent year-over year — in line with guidance but a pointed decline from growth rates in the previous four quarters that hovered around 30 percent.
Qualcomm and other mobile processing providers are facing stagnation in the U.S., as the high-end smartphone market grows increasingly saturated. Emerging markets such as China and India are expected to become the key drivers of smartphone shipment growth. Qualcomm is already looking to cash in on the rollout of LTE in China.
However, Qualcomm's growth potential in China could be hindered by an anti-monopoly probe it is facing in the country.