Qualcomm on Wednesday forecast current-quarter profit below analysts’ expectations as demand weakens for its chips used in mobile devices in a slowing market.
The San Diego-based company, whose customers include Apple, said it expected its mobile chip shipments to fall by 16-25 percent in the second quarter from a year earlier. Qualcomm also expects 3G and 4G device shipments to decline by 4-14 percent, hurting its licensing revenue.
The forecasts accompanied the earnings report for its first fiscal quarter ended Dec. 27, in which net income fell 24 percent to $1.5 billion, or 99 cents per share, from $2.0 billion, or $1.17 per share, a year ago. Revenue fell 19 percent to $5.8 billion from $7.1 billion.
However, cash flow increased from $2.4 billion a year ago to $2.7 billion in the latest quarter as the company aggressively cut costs through layoffs and other changes.
The chipmaker’s weak outlook comes a day after Apple forecast its first quarterly revenue drop in 13 years and reported the slowest-ever rise in iPhone shipments as the critical Chinese market shows signs of weakness.
Qualcomm shares fell in extended trading on Wednesday. Up to Wednesday’s close, the stock had lost a third of its value in the past 12 months.
The company trimmed its estimates for “premium tier shipments” due to “slower than expected sell-through at a large” customer, it said on a post-earnings conference call.
Qualcomm’s mobile chip shipments fell 10 percent in the first quarter, pulling down its equipment and services revenue by 21.6 percent.
Revenue from licensing declined 10.4 percent.
“I think on licensing it’s getting really fuzzy; they’re not suggesting any upside to licensing, which I think is what people really wanted to see before getting excited in the stock again,” Bernstein analyst Stacy Rasgon told Reuters.
Qualcomm said in December it had decided not to split its slowing chipmaking business from its technology licensing business.
The company forecast an adjusted profit of 90 cents to $1.00 per share for the second fiscal quarter, below the average analyst estimate of $1.01.
Its revenue forecast of $4.9 billion to $5.7 billion was also largely below analysts’ expectations of $5.68 billion.
Reuters contributed to this article.
