Qualcomm President and CEO Cristiano Amon speaks at the Web Summit held at Parque das Nacoes in Lisbon on November 12, 2024.
Patricia de Melo Moreira | AFP | Getty Images
Qualcomm announced Wednesday that its first-quarter results exceeded expectations, but fell short of the company’s expectations due to a global memory shortage.
Qualcomm stock fell as much as 10% in after-hours trading.
Here’s a comparison of chipmaker results and LSEG’s consensus estimates:
EPS: $3.50 adjusted vs. $3.41 expected Revenue: $12.25 billion vs. $12.21 billion expected
Qualcomm said it expects adjusted earnings per share for the current quarter to be between $2.45 and $2.65, with revenue between $10.2 billion and $11.0 billion. Analyst estimates compiled by LSEG were for sales of $11.11 billion and earnings per share of $2.89.
Qualcomm executives said in interviews that the lack of guidance is directly related to the global memory shortage. Large orders for memory for data centers are taking away production capacity for memory for smartphones and other devices.
The company’s smartphone customers buy their own memory and pair it with Qualcomm processors and modems, closely monitoring purchases and inventory and adjusting based on memory availability.
Akash Palkiwala, Qualcomm’s head of finance, said the gap between consensus estimates and guidance was due to memory issues.
“We’re starting to see that memory is going to determine the size of the mobile market,” Qualcomm CEO Cristiano Amon said in an interview.
Amon added that while demand for devices remains high and the smartphone market is undergoing an upgrade cycle, Qualcomm expects there will be problems with smartphone supply.
He said he doesn’t know whether smartphone makers will raise prices, but he expects Qualcomm customers to focus on higher-end models that can absorb higher memory prices rather than lower-end devices. Amon said on the earnings call that Qualcomm is most competitive in premium devices.
“We believe this is an industry issue that affects all consumer electronics products,” Amon said.
Qualcomm’s daily stock price chart.
During the quarter, Qualcomm reported mobile device sales of $7.82 billion, an increase of 3% on an annual basis. Qualcomm’s overall revenue increased 5% during the quarter.
Qualcomm’s small businesses grew even faster this quarter.
The company’s Internet of Things group includes both chips for industrial use and chips that provide power. meta Ray-Ban smart glasses had sales of $1.69 billion, an increase of 9% during the quarter. Qualcomm’s automotive business, which supplies chips to automakers including Toyota, is also growing, with the division increasing 15% to $1.1 billion.
Qualcomm said it expects data center sales from new AI chips and other data center products to start appearing in fiscal 2027.
“Everything is going well,” Amon said on the earnings call.
Net income for the period was $3.0 billion, or $2.78 per diluted share, compared with net income of $3.18 billion, or $2.83 per diluted share, in the prior-year period.
In addition to selling chips, Qualcomm licenses intellectual property related to technologies such as 5G to other hardware companies. This is reported as QTL revenue and is much more profitable than hardware sales. Qualcomm reported QTL revenue of $1.59 billion during the quarter.
Correction: This article has been corrected to reflect that Qualcomm’s fiscal 2025 first quarter net income was $3.18 billion. A previous version incorrectly stated the company’s net income for the period.
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