Qualcomm Q2: Sales Up, Earnings Tumble 45 Percent, Blames Samsung for Gloomy Outlook

Written by DH Kass 1
April 23, 2015

Qualcomm reported net income of $1.1 billion, or $0.63 a share, in Q2 2015 on $6.9 billion in revenue, for a 3 percent increase in sales but a 45 percent tumble in earnings from the same period last year.

Mobile chip giant Qualcomm (QCOM) reported net income of $1.1 billion, or $0.63 a share, in Q2 2015 on $6.9 billion in revenue, for a 3 percent increase in sales but a 45 percent tumble in earnings from the same period last year.

On a non-GAAP basis, Qualcomm’s per share earnings showed up at $1.40, more than the $1.33 analysts expected, 7 percent ahead of last year and 4 percent more than the immediately prior quarter.

Qualcomm again pared its forecast for the current fiscal year as it did in January, this time lowering expected revenue to between $25 billion and $27 billion from its earlier outlook of $26.3 billion to $28 billion, and GAAP earnings per share to $3.28 to $3.68 from the prior $3.56 to $3.76.

For Q3 2015, Qualcomm forecast a significant slide in sales and earnings from the same time last year, as the vendor guided to $5.4 billion to $6.2 billion in sales, a 9 percent to 21 percent drop from the $6.8 billion the company posted in Q3 2014. Per share earnings for the upcoming period are expected to come in at $0.67 to $0.82, for a 37 percent to 49 percent slide from last year.

Qualcomm implied that it’s feeling the heat from Apple’s (AAPL) market strength and from Samsung’s electing to use its in-house Exynos process in its new flagship Galaxy S6 models, rather than Qualcomm’s Snapdragon 810.

Word surfaced earlier this week that Samsung will manufacture Qualcomm’s next generation Snapdragon 820 at its 14-nanometer plant.

“While we remain confident in the significant growth opportunities ahead, we are reducing our QCT outlook for fiscal 2015, primarily due to the increased impact of customer share shifts within the premium tier and a decline in our share at a large customer,” said Steve Mollenkopf, Qualcomm chief executive.

Mollenkopf said that the vendor’s expected revenue decline for the remainder of its fiscal year prompted a cost analysis to look for places to boost profit.

“In addition to our ongoing expense management initiatives, we have initiated a comprehensive review of our cost structure to identify opportunities to improve operating margins while at the same time extending our technology and product leadership positions,” he said.