Qualcomm misses mark on Q3; trims outlook

UPDATED: Qualcomm is getting a handle on its supply chain issues, but needs a strong surge in the fourth quarter.
Written by Rachel King, Contributor

Qualcomm just missed Wall Street expecations with its latest earnings report, forcing the Snapdragon maker to slighly cut its outlook for the fourth fiscal quarter.

The mobile chip maker reported a third fiscal quarter net income of $1.21 billion, or 69 cents a share (statement). Non-GAAP earnings were 85 cents a share on a revenue of $4.63 billion.

Wall Street was expecting Qualcomm to report fiscal third earnings of 86 cents a share on revenue of $4.67 billion. Qualcomm said in its second quarter that it was having trouble meeting meeting demand.

Qualcomm chairman and CEO Paul Jacobs in prepared remarks that 3G and 4G adoption worldwide drove stronger year-over-year growth for the manufacturer's chipset and licensing businesses in Q3.

Looking forward, our growth estimates for 3G/4G device shipments in calendar 2012 have moderated slightly, and we now expect the demand profile of the calendar year to be more back-end loaded as new devices are launched for the holiday season. Although our outlook for semiconductor volumes in the fiscal fourth quarter has been reduced from our prior expectations, we are ramping supply of our 28 nanometer chipsets to help enable what we expect to be a strong December quarter for our semiconductor business.

In a nutshell, Qualcomm is getting a handle on its supply chain issues, but needs a strong surge in the fourth quarter. In the meantime, Qualcomm cut its fourth quarter outlook.

For the outlook, Qualcomm is predicting a revenue of $4.45 billion to $4.85 billion at the end of Q4 2012 with non-GAAP earnings between 78 to 84 cents a share. For the fiscal 2012, Qualcomm is projecting a revenue to fall between $18.7 billion to $19.1 billion with non-GAAP earnings between $3.61 and $3.67 per share.

Wall Street is looking for Qualcomm to report fourth quarter earnings of 89 cents a share on revenue of $4.89 billion. For the year overall, Wall Street is expecting Qualcomm to report earnings of $3.74 a share on revenue of $19.2 billion.

UPDATE: During the quarterly conference call with investors and analysts on Wednesday, Jacobs acknowledged that Qualcomm could have done better this quarter, but the company is looking forward to a stronger close at the end of 2012.

"People still love their smartphones," Jacobs remarked. "We’re working harder to give them better and better experiences."

Specifically, Jacobs cited 3G/4G connectivity on tablets, mobile PCs, machine-to-machine and other devices as growth contributors along with Microsoft's support behind the Echo system for Windows RT and the release of Windows 8 -- both set to roll out this October.

By the numbers:

  • MSMchip shipments: 141 million units, up 18 percent year-over-year
  • Total reported device sales during March quarter: Approximately $47.8 billion, up 31 percent year-over-year but down 8 percent from previous quarter
  • March quarter estimated 3G/4G device shipments:  Approximately 206 to 211 million units, at an estimated average selling price of approximately $226 to $232 per unit
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