Qualcomm misses Q4 earnings, revenue targets with weak outlook

Tech earnings have been missing targets left and right this quarter, and Qualcomm didn't help curb that trend with its fiscal fourth quarter report on Wednesday.

The global semiconductor business reported a net income of $1.89 billion, or $1.11 per share (statement).

Non-GAAP earnings were $1.26 per share on a revenue of $6.69 billion, up three percent annually and down two percent sequentially.

But Wall Street wanted earnings of at least $1.32 per share along with revenue of $7.03 billion.

As a result, Qualcomm shares began to tumble by four percent in after-hours trading.

For fiscal 2014 overall, Qualcomm reported revenue of $26.49 billion, up seven percent year-over-year, with earnings of $5.27, up 17 percent year-over-year.

Glossing over the worse-than-expected results, Qualcomm CEO Steve Mollenkopf reflected on the end of the fiscal year in prepared remarks:

We are pleased to report another year of record financial performance as our 3G/4G LTE multimode and other advanced technologies continue to enable the growth of wireless data around the world, driven by our broad chipset roadmap. We are forecasting continued growth of global 3G/4G device shipments in calendar year 2015, particularly in emerging regions. Our fiscal 2015 outlook reflects continued LTE leadership in our semiconductor business and is tempered by the issues we are facing in China related to our licensing business. Through this time, we remain focused on building our technology leadership in smartphones, while pursuing opportunities to extend our solutions into adjacent areas.

Qualcomm elaborated about the China situation farther down in the report, honing in on concerns surrounding the rollout of 3G/4G LTE multimode and an investigation by the China National Development and Reform Commission (NDRC) into Qualcomm's business practices.

We also believe that certain licensees in China currently are not fully complying with their contractual obligations to report their sales of licensed products to us (which includes certain licensees underreporting a portion of their 3G/4G device sales and a dispute with a licensee) and that unlicensed companies may seek to delay execution of new licenses while the NDRC investigation is ongoing.

The San Diego-headquartered corporation shipped 236 million MSM chip units during the quarter, up 24 percent year-over-year and five 5 percent sequentially.

Total device sales in Q4 rang up to approximately $57.4 billion, a five percent dip year-over-year and one percent sequentially. The average selling price for 3G/4G devices fell around $220 to $226 per unit.

For the current quarter, Wall Street is expecting Qualcomm to deliver earnings of $1.43 per share and revenue of $7.39 billion.

However, Qualcomm provided a much softer forecast for the first fiscal quarter, projecting $6.62 billion in revenue with earnings of $1.26 per share once again.

For fiscal 2015, Qualcomm is aiming for a slightly higher revenue range of $26.8 billion to $28.8 billion with earnings between $5.05 and $5.35, a drop between four and two percent respectively.