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Profit Qualcomm (QCOM) Q3 2020



Steven Mollenkopf, CEO of Qualcomm

Mike Blake | Reuters

Qualcomm rose more than 13 percent on Wednesday as the company reported a profit in the fiscal third quarter that exceeded expectations and announced a long-term patent agreement with Huawei that resolved a major unanswered legal issue for the company.

This was contrary to the Refinitive consensus estimates:

  • EPS: $ 0.86 (excluding GAAP), estimated vs. $ 0.71
    .
  • Estimated revenue: $ 4.89 billion vs. $ 4.8 billion.

However, it is difficult to compare reported gains with analyst estimates as the coronavirus pandemic continues to affect global economies and makes forecasting more difficult.

Revenues were the same year-on-year and diluted EPS increased by 8% year-on-year.

Qualcomm has benefited greatly from building 5G networks and has issued a strong forecast for the coming quarter, indicating that 5G is beginning to become an economic force. Qualcomm sells modem chips to phone manufacturers and licenses critical patents to anyone using 5G technology.

Qualcomm said it has entered into a long-term patent agreement with Huawei, which will be a major seller of 5G phones and network equipment. Qualcomm has resolved similar patent lawsuits with Apple, a major phone customer, last year.

“Qualcomm has signed a long-term license agreement with Huawei, which indicates that Qualcomm is entering a period in which it has long-term licensing agreements with all major mobile phone manufacturers in the foreseeable future,” said Patrick Moorhead, an analyst at Moor Insights.

Qualcomm said it expected shipments of 5G phones to be 15% lower year-over-year in the quarter ending in September, partly due to a customer postponing the “global launch of the 5G phone.” Qualcomm expects non-GAAP EPS to decline by $ 0.25 per share. Qualcomm said it will supply 175 to 225 million 5G phones by 2020.

Qualcomm’s view of 5G mobile phone plans has changed since the last quarter, when Qualcomm said its Apple-owned customers are likely to continue to release 5G phones as previously planned.

Qualcomm said it expects to report $ 1.05 to $ 1.25 in non-GAAP diluted EPS and revenue excluding certain items would be between $ 5.5 billion and $ 6.3 billion in the quarter ending September.


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