Qualcomm plunges despite Q1 earnings beat

Justin Sullivan/Getty Images News

Qualcomm (NASDAQ:QCOM) shares plunged after the San Diego-based chipmaker reported first-quarter results that topped expectations.

For the period ending December 26, Qualcomm said it earned $3.23 per share on $10.7 billion in revenue, up 30% year-over-year. A consensus of Wall Street analysts expected Qualcomm to earn $3 per share on $10.43 billion in revenue during the period.

Aiding the results were strength in the Handset division, which saw revenue rise 42% year-over-year to $5.98 billion, as well as the company's Internet of Things unit, which jumped 41% year-over-year to $1.47 billion.

Qualcomm (QCOM) shares fell more than 7% to $173.60 in extended-hours trading, after rising more than 6% during the regular session.

"Our record quarterly results reflect the strong demand for our products and technologies, with QCT revenues exceeding those of any fabless semiconductor company," said Chief Executive Cristiano Amon in a statement. "We are at the beginning of one of the largest opportunities in our history, with our addressable market expanding by more than seven times to approximately $700 billion in the next decade. Our one technology roadmap positions us as the partner of choice for both mobile and the connected intelligent edge."

During the quarter, Qualcomm returned $1.9 billion to shareholders, including $1.2 billion in stock buybacks.

For the second quarter, Qualcomm said it expects to generate between $10.2 billion and $11 billion in revenue, with earnings coming in between $2.80 and $3 per share. Analysts expected the company to earn $2.48 per share on $9.54 billion in revenue.

Qualcomm will hold an earnings call at 4:45 P.M. EST to discuss the results.

Last month, Qualcomm (QCOM) was picked by Goldman Sachs as one of the top stock picks for tightening financial conditions, due to its strong free cash flow, high margins and rock-solid balance sheet.

Comments

[Technosemi]

Here we are on a 2.5% NSDQ up day, w/AMZN's price continuing to go up, but QCOM is doing NOTHING. Apparently, its blowout earnings and rise are losing their luster. What gives here?

[The Cardinal]

@Technosemi June quarter fears of a slowdown.

[dima_b]

@Technosemi it's not QCOM, it's the entire semi sector. Take a look at semi funds/ETFs. QCOM is pretty much matching their performance today.

[Technosemi]

@dima_b
It's not the entire semi sector. Look at MRVL - up a lot today.

[$CLU]

They should begin playing with the bots to destroy them.
"We regret to inform eveyone that... we had outstanding quarter!
And Interestingly, we just bought back a huge block of underpriced shares 30 seconds ago!"

[nickfrancois]

How do you call a stock with a 15 PE and with revenues growing at 30 percent a year.

A steal.

This is QCOM.

Projected EPS of $12 this year. And massive buybacks.

This stock is going to 240.

[SleepyInSeattle]

Long QCOM.

[omnimoeish]

Amazing, this company has lower PE than Apple and growing net income way faster. I might have to buy more here. I hate to average up my cost basis at this point but this stock really isn't getting the respect it deserves.

[redarrow5150]

@omnimoeish I've been saying this for quite a while over a StockTwits. Don't understand how these "value funds" aren't buying QCOM. I mean I do but it's like volatility chases them away when it comes to "value."

[User 40190236]

@omnimoeish all correct. Only real way to self-fix this is to introspect and massively buy back stock.
V. Long QCOM.

[aretailguy]

@omnimoeish I LOVE to average up my cost basis. That means that I picked a winner and it is continuing wo be a winner.

[Benedetto59]

Good. I will buy back my calls tomorrow. The ones I sold this morning$$$$

[Amstragram]

How does AVGO carries valuation ratios so much higher than Qualcomm … ? The biggest revenue maker in the fabless world sporting the lowest valuation multiples … even NXPI is higher.

[omnimoeish]

@Amstragram AVGO pays a higher dividend and there's a lot of FUD around OEMs bypassing QCOM as a middle man.

[current$eas]

@omnimoeish Yeah I think that the OEM's designing chips in house is the biggest risk in the eyes of investors. I am not familiar enough with their business model so I will defer to someone more in the know, but I would hazard a guess that even when companies like Apple are designing custom chips, they are licensing a fair amount of IP from Qualcomm that will serve as recurring revenue. If I am correct in saying that, then the next logical question is: how is Qualcomm using that revenue to improve the business?

Otherwise, I have been a happy investor since 2016.

[User 40190236]

@current$eas IP revenue is relatively small (cf to when QCOM sells chips).

[1.21 Jigawatts]

Just options straddles there, nothing unusual about rising before earnings and dropping after. Long QCOM either way.

[WW Burgess]

'Plunges'=down 3% in aftermarket when it was up 6% plus during the regular trading day.

[Mister Doom]

Plunges, tanks, crashes, tumbles. So called journalists love this it means
Nothing. They exaggerate everything. Now FB that did tumble. They got
One right

[RealRural]

@Mister Doom FYI: Journalists don't write headlines. Editors do. And what makes them "so-called?" Like to hear your definition.

"They exaggerate everything." Most don't. There is a difference between trash cable TV talking heads and click bait websites seeking eyes, and actual print and website journalists, who have to adhere to actual reporting ethics and guidelines and have their stories vetted and issue corrections if there are errors.

Would be helpful if you read up on the profession rather than opining without the facts. That, by the way, is called "opinion" in the trade. Or in your case, perhaps, fake news?

[phitinh81]

Trading algorithms have a mission nowadays - plunging tech shares no matter what. Such a great opportunity to buy semi at huge discount with P/E around 20 & PEG around 0.5 like Qualcomm, AMD...

[usera2020]

I think the guys that program the algorithmic trading systems are getting their jollies out this week.

[Iroha Isshiki]

Well, it fell, but did not plunge.

[User 40190236]

@Iroha Isshiki yes. Even hit close to closing price (before earnings release).

[Zeke Hilgenflotsamflopsin]

Anyone listen to cc? Synopsis, please.

[justaguy11]

I believe they are confusing QCOM with META.

[mcu7300]

@justaguy11 I don't think so. QCOM took quite the plunge initially in after hours. It came back a little but still finished down overall in after hours

[RealRural]

@mcu7300 SA now showing it up 6.6% at 8:30 p.m.

[Mili21]

@RealRural

NASDAQ | Post-Market: $182.50-5.70 (-3.03%)

www.nasdaq.com/...

[User 31614085]

annualized Return On Equity = 120%
that is just a crazy number...a profitable bank dreams of a 20% ROE

[OscarSmith]

@MJL987 obviously it is also due to being in an exceptional time (supply chain constraints= pricing power). As inventory builds up that should go back to precovid levels

[Michael Dolen]

FB is down 23% and headline on here says "stumbles."

QCOM is down 2% and headline says "plunges."

???

[RastaMann]

@Michael Dolen Hi Michael you are Spot On.. QCOM will shoot to a floor of $200 once rationality returns. Nvidia is a Great Company , QCOM has better relative valuation 77Xs Vs 20Xs….Growth in 22 from IOT,ADAS,Automotive.. Margins are also improving… Great momentum in ( Valuation , Growth + Margins)

[RealRural]

@Michael Dolen Either a bad headline or the quick after-hour reax was down briefly that much when they filed the news release. Odd indeed.

[Mili21]

@RealRural
I guess, when the article was published stock was trading ~6% down which recovered little bit...I would wait for markets to open and see the trend.
Before hours, will give us an indication, where it's heading during regular session.

[jimoc]

Down less than 4 points now. Plummets?

[aochamp]

Let's see, up over 6% during the day and down under 2% after hours. I'll take that "all the way to the bank!" Thank you

[User 31614085]

great quarter by Q. Only blemish i saw was Cash from ops was a little bit lite..and the guidance for this quarter is flattish (vs Dec q)..but that is typically the way the March quarter goes (seasonality)...