On April 30th, local time on Wednesday, Qualcomm released the financial report for the second fiscal quarter of 2020 (December 30, 2019 to March 29, 2020), making a solid forecast for the current sales performance of the third fiscal quarter It means that China, the world's largest smartphone market, has basically returned to normal levels.
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Qualcomm said in a statement on Wednesday that the company ’s revenue for the third fiscal quarter will be between $ 4.4 billion and $ 5.2 billion, while analysts estimate an average of $ 4.77 billion. The company said that the profit per share, excluding certain items, will range from US $ 0.6 to US $ 0.8.
Qualcomm CEO Steve Mollenkopf (Steve Mollenkopf) said in an interview: "It can be said that China is a role model, you will see the situation improved in the third fiscal quarter." Demand for smartphones in the Chinese market "Very close to normal levels, and the 5G combination is better than we expected."
Molenkov added that the supply problem has basically been solved and future sales will depend on the level of consumer spending.
Qualcomm shares rose about 3% in after-hours trading in New York to close at $ 78.97. Qualcomm's share price has fallen by 10% this year.
Qualcomm said that revenue in the second quarter rose 4.7% to $ 5.2 billion, at the company's previously expected median. Net profit fell to 468 million US dollars, and the combined earnings per share were 0.41 US dollars. Earnings per share excluding certain items is $ 0.88, while Wall Street analysts expect an average of $ 0.78.
Qualcomm has tied its business success to the 5G network launched worldwide. The data transmission speed of the 5G network is expected to increase significantly. This prospect has prompted many consumers to extend the use of existing mobile phones and wait for the improvement of device performance. Qualcomm warned that demand for 5G phones will not show up until the second half of this year.
Molenkov said that China has invested heavily in the construction of 5G networks, and North America has also continued to deploy. Some parts of Europe have been affected by the epidemic, and this process has slowed. Despite this, Qualcomm maintains its forecast of 175 million to 225 million 5G mobile phone shipments this year. These phones require more expensive Qualcomm chips.
Qualcomm is the largest manufacturer of smartphone main processors and modems. The company has repaired its relationship with Apple, and its chips may reappear on iPhones launched later this year. However, as Huawei focused on the local market and adopted its own chip production equipment, Qualcomm's market share in China has declined.
Most of Qualcomm's profits come from mobile phone patent licensing. Regardless of whether mobile phone manufacturers use Qualcomm chips, Qualcomm will charge a certain percentage of each mobile phone sold. Most of the company's revenue comes from the sale of mobile phone processors and modems.
Qualcomm is getting rid of legal disputes and regulatory procedures that have threatened its licensing model for many years. Qualcomm previously disclosed in a document that the company received information from the European Commission on December 3 last year. The European Commission is investigating whether the company is using its dominant position in the baseband processor of the 5G RF chip market to engage in anti-competitive behavior.
