Earnings Preview: Qualcomm

| About: Qualcomm Inc. (QCOM)

Qualcomm (NASDAQ:QCOM) is expected to report Q3 earnings after the market close on Wednesday, July 21, with a conference call scheduled for 4:45 pm ET.


The consensus estimate is 54c for EPS and $2.63B for revenue, according to First Call. Qualcomm has disappointed investors two straight quarters, with falling prices overshadowing growth of 3G networks in China and elsewhere. Investors will be looking for signs that phone prices have hit bottom. The average wholesale price slid to $192 earlier this year from $205 last year. Qualcomm's stock plunged nearly 13% since April 21, when it declared its Q2 results and provided a weak financial outlook for Q3/FY10, due to increasing competitive threat resulting in lower average selling prices, or ASPs. Competition is likely to occur from formidable rivals such as Broadcom (BRCM), ST-Ericsson and Infineon, as well as from low-cost competitors such as Mediatek of Taiwan and VIA Technologies of China. Guidance for Q3 was for EPS 51c-55c on $2.5B-$2.7B in revenue. Guidance for FY10 was EPS of $2.21-$2.32 on $10.4B-$11.0B in revenue.

Analyst Views

William Blair says that the sentiment on the stock is overall negative, and continues to be in the penalty box with investors. The firm is expecting mixed results for Q3, modeling EPS of 53c and revenues of $2.6B. William Blair estimate 99.5 million MSM shipments with an ASPof $15.80 and 137 million QTL device shipments with an ASP of $181. William Blair say sthe general consenus that the low $30 is the bottom in the shares. The firm believes investors have appropriately priced in the short-term negative news -- that the worst is over -- and they continue to like the long-term story. William Blair would like the get the quarter out of the way before building positions in the name.