Earnings Preview: Qualcomm

Qualcomm (QCOM) is expected to report Q4 earnings Thursday November 6 after the close with a conference call scheduled for 4:45 pm ET.

Guidance

The consensus estimate is 60c for EPS and $2.86B for revenue, according to First Call. Guidance provided by management on the last earnings call was for Q4 EPS of 49c to 51 on revenue of $2.5 to $2.7B; and for FY08 $2.11 to $2.13 and revenue of $10.3B to $10.5B.

Analyst Views

ThinkPanmure on Oct. 29 lowered its estimates in advance of its Q3 earnings, but had recommended investors buy the stock as it believes the bad news is widely expected. ThinkPanmure believes that the weaker-than-expected guidance provided by the company was due to Qualcomm's customers' efforts to work down inventories. The firm thinks Q3 came in even lighter than QCOM had expected as there has been chatter that the supply chain virtually stopped the last week of September.

The firm has been hearing that Q4 demand for Qualcomm's products is more closely matched to their inventory levels than what is being experienced by other semiconductor manufacturers. ThinkPanmure says, it remains to be seen just how bad the holiday season will be this year, and thus where the estimates can go; but, the firm is encouraged to hear signs of life within the Qualcomm's supply chain.

ThinkPanmure continues to like the Qualcomm story given the focus on 3G this year (the iPhone, the Bold, etc.), and while the upside from the litigation resolution with Nokia (NOK) is now behind it, Qualcomm's business model and its 4G patent position emerged intact. Qualcomm has a history of establishing conservative guidance after its September-quarter results, and many analysts highly doubt this year will be much different.