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Qualcomm reported its fiscal third-quarter earnings, exceeding Wall Street expectations in both revenue and earnings per share. The company’s adjusted earnings per share stood at $2.33, surpassing the anticipated $2.25, while adjusted revenue reached $9.39 billion, exceeding the expected $9.22 billion. Despite a brief dip of 1% in extended trading, Qualcomm’s stock initially surged by 7%.
For the quarter ended June 23, Qualcomm’s net income was $2.13 billion, or $1.88 per share, compared to $1.8 billion, or $1.60 per share, in the same period last year. Looking ahead, the company projects sales between $9.5 billion and $10.3 billion for the current quarter, with earnings guidance ranging from $2.38 to $2.58 per share, slightly below Wall Street’s forecast of $2.45.
The company’s primary revenue driver remains its handsets business, which saw a 12% increase in sales from the previous year, generating $5.9 billion. This growth indicates a recovery in the smartphone market, which has been sluggish over the past two years. Qualcomm’s advanced Snapdragon chips, integral to “AI smartphones” like recent Samsung models, have been a key contributor to this segment’s performance. CEO Cristiano Amon noted that the premium tier of smartphones, fueled by AI capabilities, is growing faster than the broader market.
While still a smaller portion of Qualcomm’s revenue, the automotive sector showed significant promise with an 87% year-over-year increase to $811 million, surpassing analyst expectations of $641.7 million. The company views this area as a crucial opportunity for future expansion and diversification, particularly in integrating more software and semiconductors into vehicles.
The “Internet of Things” (IoT) segment, which includes chips for lower-cost devices and Meta’s Quest headsets, reported a slight decline of 8% year-over-year, bringing in $1.4 billion. However, this figure was above the expected $641.7 million. Qualcomm also marked a significant milestone with the launch of the Snapdragon X Elite chip for Windows laptops, furthering its diversification efforts.
The company’s chip business, collectively known as QCT, recorded a 12% year-over-year increase, with total sales reaching $8.1 billion. Meanwhile, Qualcomm’s licensing business, QTL, which collects fees from companies using its 5G and other cellular technologies, grew by 3% to $1.3 billion.
Despite the positive results, Qualcomm faced a setback as its U.S. license to export products to Huawei was revoked, potentially impacting future revenue. The company reported returning $949 million to shareholders through dividends and repurchasing 7 million shares worth $1.3 billion during the quarter.