Accelerated sales and profit slump at Qualcomm

Qualcomm’s revenue from Christmas through March 26 was $9.3 billion. That’s a decrease of 17 percent. For the chip designer, it was the second quarter of fiscal 2023. Operating cash flow (-46% to $1.5 billion), operating profit (-46% to $2.1 billion) and pre-tax profit (-45% to Q1 .9 billion dollars).

Net income fared less well, falling 42 percent to $1.7 billion. This emerges from the quarterly figures published by the US company on Wednesday. Qualcomm shares are down more than 5.5 percent on Thursday. This is also due to the outlook, which announces further contraction: Sales for the current quarter are expected to fall below nine billion dollars, while operating costs are likely to remain the same. Stock market analysts had expected quarterly sales of $9.1 billion on average.

The modems for dialing into mobile phone networks in numerous smartphones and the main processors of many Android cell phones come from Qualcomm. In addition, Qualcomm supplies computing platforms for motor vehicles and laptops. Several manufacturers offer Windows laptops for sale, the heart of which is a Snapdragon 8cx Qualcomms. Compared to the smartphone business, the company only gets crumbs. And smartphones in particular are showing a sharper decline in global demand than Qualcomm had previously expected – management is no longer ruling out the possibility that the smartphone slump will also be reflected in the next quarter.

The company reports its financial results in two divisions: Qualcomm CDMA Technologies (QCT), which builds chips, and Qualcomm Technologies Licensing (QTL), which sells licenses. The latter has almost a fifth less turnover (-18% to 1.3 billion dollars) and a quarter in pre-tax profit (-25% to 0.9 billion dollars). QCT reports a sixth lower revenue (-17% to $7.9 billion) and 37% lower pre-tax profit ($2.1 billion).

Herein lies the only bright spot: while revenue from chips for mobile phones has slipped by a sixth and from chips for other networked devices (Internet of Things, IoT) by a quarter, sales to the automotive industry are up by one Fifth. But because that’s a comparatively modest $447 million, it doesn’t make the herb fat.


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