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Will Top-Line Contraction Hurt Qualcomm's (QCOM) Q3 Earnings?
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Qualcomm Incorporated (QCOM - Free Report) is set to report third-quarter fiscal 2023 results on Aug 2, after the closing bell. It pulled off a trailing four-quarter earnings surprise of 1.05%, on average. The company is expected to have recorded lower year-over-year revenues due to falling demand for its smartphone chips amid global uncertainty.
Factors at Play
During the to-be-reported quarter, Qualcomm introduced Snapdragon 4 Gen 2 mobile platform to boost performance and ensure greater power efficiency. It provides effortless, all-day use with fast CPU speeds, sharp photography and videography, and optimal 5G connectivity. It also launched two modem chipsets with satellite capability — the Qualcomm 212S Modem and the Qualcomm 9205S Modem — providing connectivity and coverage even in the most remote areas.
During the quarter, Qualcomm extended its collaboration with Sony and agreed to work together on the next generations of premium, high- and mid-tier smartphones. The partnership aims to integrate Qualcomm’s advanced Snapdragon mobile platforms into Sony’s future smartphone lines, providing users with enhanced functionality, higher performance and immersive user experiences. This is likely to be reflected in the upcoming quarterly results.
However, Qualcomm anticipates a rapid deterioration in demand for its handset chips, as high inventory combined with low demand situations have forced vendors to reduce shipments drastically. Rising geopolitical tension in Europe and Asia is fueling global instability and adding to the macroeconomic challenges. In addition, softness in demand in China due to the adverse economic impact of the coronavirus pandemic is likely to have affected unit volumes. These are likely to have hurt the company’s fiscal third-quarter revenues.
For the June quarter, the Zacks Consensus Estimate for revenues is pegged at $8,514 million, indicating a decline from the year-ago quarter’s reported figure of $10,936 million. Adjusted earnings per share are pegged at $1.81, suggesting a contraction from $2.96 in the year-earlier quarter.
Our revenue estimate for the QCT segment is pegged at $7,263.2 million, suggesting a year-over-year decline of 22.6%, while that for the QTL segment is pegged at $1,210.6 million, down 20.3%.
Key Developments in Q3
In the fiscal third quarter, Qualcomm inked an agreement to acquire Autotalks for an undisclosed amount. Autotalks is a fabless semiconductor company focused on V2X (vehicle-to-everything) communications. It provides automotive-qualified dual-mode global V2X solutions compatible with multiple V2X standards that are designed to reduce collisions and improve mobility. The combination of Autotalks’ expertise and industry-leading products with Qualcomm’s deep know-how is likely to help accelerate the development and adoption of V2X solutions to improve traffic efficiency and road user safety.
Earnings Whispers
Our proven model predicts an earnings beat for Qualcomm for the fiscal third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is perfectly the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +3.68%, with the former pegged at $1.88 and the latter at $1.81. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Qualcomm currently has a Zacks Rank #3.
Other Stocks to Consider
Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season:
The Earnings ESP for Amazon.com, Inc. (AMZN - Free Report) is +2.99% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Aug 3.
The Earnings ESP for Alibaba Group Holding Limited (BABA - Free Report) is +6.19% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Aug 10.
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Will Top-Line Contraction Hurt Qualcomm's (QCOM) Q3 Earnings?
Qualcomm Incorporated (QCOM - Free Report) is set to report third-quarter fiscal 2023 results on Aug 2, after the closing bell. It pulled off a trailing four-quarter earnings surprise of 1.05%, on average. The company is expected to have recorded lower year-over-year revenues due to falling demand for its smartphone chips amid global uncertainty.
Factors at Play
During the to-be-reported quarter, Qualcomm introduced Snapdragon 4 Gen 2 mobile platform to boost performance and ensure greater power efficiency. It provides effortless, all-day use with fast CPU speeds, sharp photography and videography, and optimal 5G connectivity. It also launched two modem chipsets with satellite capability — the Qualcomm 212S Modem and the Qualcomm 9205S Modem — providing connectivity and coverage even in the most remote areas.
During the quarter, Qualcomm extended its collaboration with Sony and agreed to work together on the next generations of premium, high- and mid-tier smartphones. The partnership aims to integrate Qualcomm’s advanced Snapdragon mobile platforms into Sony’s future smartphone lines, providing users with enhanced functionality, higher performance and immersive user experiences. This is likely to be reflected in the upcoming quarterly results.
However, Qualcomm anticipates a rapid deterioration in demand for its handset chips, as high inventory combined with low demand situations have forced vendors to reduce shipments drastically. Rising geopolitical tension in Europe and Asia is fueling global instability and adding to the macroeconomic challenges. In addition, softness in demand in China due to the adverse economic impact of the coronavirus pandemic is likely to have affected unit volumes. These are likely to have hurt the company’s fiscal third-quarter revenues.
For the June quarter, the Zacks Consensus Estimate for revenues is pegged at $8,514 million, indicating a decline from the year-ago quarter’s reported figure of $10,936 million. Adjusted earnings per share are pegged at $1.81, suggesting a contraction from $2.96 in the year-earlier quarter.
Our revenue estimate for the QCT segment is pegged at $7,263.2 million, suggesting a year-over-year decline of 22.6%, while that for the QTL segment is pegged at $1,210.6 million, down 20.3%.
Key Developments in Q3
In the fiscal third quarter, Qualcomm inked an agreement to acquire Autotalks for an undisclosed amount. Autotalks is a fabless semiconductor company focused on V2X (vehicle-to-everything) communications. It provides automotive-qualified dual-mode global V2X solutions compatible with multiple V2X standards that are designed to reduce collisions and improve mobility. The combination of Autotalks’ expertise and industry-leading products with Qualcomm’s deep know-how is likely to help accelerate the development and adoption of V2X solutions to improve traffic efficiency and road user safety.
Earnings Whispers
Our proven model predicts an earnings beat for Qualcomm for the fiscal third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is perfectly the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +3.68%, with the former pegged at $1.88 and the latter at $1.81. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
QUALCOMM Incorporated Price and EPS Surprise
QUALCOMM Incorporated price-eps-surprise | QUALCOMM Incorporated Quote
Zacks Rank: Qualcomm currently has a Zacks Rank #3.
Other Stocks to Consider
Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season:
Motorola Solutions, Inc. (MSI - Free Report) is set to release quarterly numbers on Aug 3. It has an Earnings ESP of +0.07% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Amazon.com, Inc. (AMZN - Free Report) is +2.99% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Aug 3.
The Earnings ESP for Alibaba Group Holding Limited (BABA - Free Report) is +6.19% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Aug 10.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.