Though some bad news was expected thanks to the guidance provided by mobile chip peers in recent weeks, Qualcomm (QCOM -3.8%) continues to slump in response to its soft FQ1 guidance, which reflects a big expected slowdown in chip shipment growth, and mixed FY14 guidance (above-consensus EPS, but below-consensus revenue).
On its CC (transcript), Qualcomm mentioned its chip division (QCT) growth will "moderate" in FY14 in part due to product mix - the fact the high-end smartphone market is "increasingly concentrated" (i.e. Samsung and Apple dominate) is said to affect QCT's sales and margins. While both Apple and Samsung are Qualcomm baseband chip clients, Apple relies on its own app processors, and Samsung partly does so.
At the same time, Qualcomm, which has been aggressively ramping R&D spend in recent quarters, says it will "control expenses" in FY14, and will exit FY14 with a lower opex run rate than it exited FY13 with. That, along with $4B in planned buybacks, is a major reason why FY14 EPS guidance is above consensus.
Goldman (Buy) is pleased with Qualcomm's FY14 3G/4G device ASP guidance of $216-$230, which implies only a 1% drop at the midpoint. It also likes Qualcomm's Chinese 4G optimism and guidance for 15% 2014 3G/4G device growth. Nomura (Buy) is disappointed with Qualcomm's FQ1 demand, but also declares the company is "demonstrating more leverage" than expected.