Qualcomm Gives Bullish Outlook on Strong Demand for Phones
(Bloomberg) -- Qualcomm Inc., the world’s largest smartphone chipmaker, gave a bullish forecast for the current quarter, buoyed by surging demand for 5G handsets. The stock rallied more than 5% in extended trading.
Revenue will be $7.1 billion to $7.9 billion in the period ending in June, the company said Wednesday in a statement. Profit, excluding certain items, will be $1.55 a share to $1.75 a share. On average, analysts predicted profit of $1.51 on revenue of $7.12 billion.
Smartphone demand in countries such as China is surging back as parts of the world return to a more normal life after pandemic lockdowns. Consumers are upgrading their mobile hardware to 5G handsets to take advantage of higher data speeds from the fifth-generation wireless networks. Qualcomm also is seeing more demand from outside the cellular market for “internet of things” devices such as those needed to connect factory equipment and home electronics.
That’s a boon for Qualcomm, although revenue gains are being limited by supply issues. The company outsources production to Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co., among others. These partners are struggling to keep up with a resurgence of demand for most types of chips.
“There’s more demand than supply across our businesses,” said incoming Chief Executive Officer Cristiano Amon. Qualcomm has ‘line of sight’ to improving supply and has concentrated available resources to more expensive chips, helping customers and its financial performance, he said.
Amon, who has been Qualcomm’s president since 2018, is succeeding CEO Steve Mollenkopf, who is retiring on June 30.
Qualcomm shares rose to a high of $146.24 in extended trading after closing at $136.57 in New York. The stock has dropped 10% in 2021.
Qualcomm is the biggest maker of chips that connect smartphones to wireless networks and also supplies processors that give the devices their computer-like capabilities. With customers including Apple Inc. and Samsung, the company’s projections are a closely watched indicator of the health of the mobile phone market.
In the fiscal second quarter, Qualcomm said revenue was $7.94 billion, a gain of 52% from a year earlier. Analysts, on average, projected $7.63 billion. Net income was $1.76 billion, or $1.53 a share. Excluding certain items, profit was $1.90 a share, compared with Wall Street’s average estimate of $1.67.
Three months ago, Qualcomm said revenue would decline in the fiscal third quarter from the preceding period citing seasonal patterns in customer ordering.
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