By Stephen Nellis and Munsif Vengattil
(Reuters) – Qualcomm Inc <QCOM.O> forecast fiscal first-quarter income above Wall Avenue estimates on Wednesday because it predicted gross sales of 5G good telephones would balloon to greater than half a billion items subsequent 12 months, powered partially by new Apple Inc <AAPL.O> iPhone 12 fashions.
Qualcomm’s shares have been up 14% in prolonged buying and selling.
The San Diego-based firm is the most important provider of processors for smartphones and modem chips that join telephones to wi-fi knowledge networks. It has invested closely in creating profitable 5G know-how hoping to revenue because it turns into mainstream in cell phones, a pattern poised to ramp up with the introduction of Apple’s first 5G telephones final month.
Income from the corporate’s chip phase, its largest by gross sales, was $4.97 billion (£3.84 billion) within the fiscal fourth quarter, in contrast with FactSet estimates of $4.59 billion.
Qualcomm this 12 months returned to being a serious provider for Apple, supplying chips that assist the brand new iPhone 12 fashions connect with high-speed 5G networks. Apple didn’t give a forecast for its gross sales in the course of the present quarter, making Qualcomm’s chip gross sales one of many few proxies for buyers to gauge the progress of the brand new iPhones.
However Qualcomm is supplying a broad swath of telephone makers past Apple with 5G chips, which is driving income and revenue progress. Apple’s iPhone’s launched a month later than regular, and, although he didn’t identify Apple, Qualcomm Chief Government Steve Mollenkopf informed Reuters in an interview that the contribution from new buyer within the quarter was small.
“The outcomes we simply printed actually embody a smaller influence than you’ll usually see with one of many new prospects that we’re ramping up, simply as a result of timing of their launch,” he mentioned.
Apple shares rose 0.6% after the announcement of Qualcomm’s outcomes.
Qualcomm mentioned it shipped 162 million chips able to wi-fi knowledge connections throughout its fiscal fourth quarter, in contrast with FactSet estimates of 155.3 million.
Primarily based on the shipments, the common promoting worth for chips was $30.9, increased than $29.3 within the earlier quarter. That’s partially as a result of Qualcomm is more and more paring its modem and processor chips with radio chips that drive up promoting costs. Gross sales of these radio chips practically doubled from the prior quarter to $852 million within the fourth quarter, serving to drive adjusted earnings per share of $1.45 versus estimate of $1.17, in line with Refinitiv knowledge.
“That is actually the 5G story exhibiting up in a giant method in our enterprise,” Mollenkopf mentioned.
Qualcomm expects chip phase income within the vary of $6.2 billion to $6.8 billion for the unit in the course of the first quarter, forward of FactSet estimates of $5.71 billion.
Qualcomm, which makes the majority of earnings from its licensing enterprise, mentioned income from the unit was $1.51 billion, above FactSet estimates of $1.30 billion.
The corporate mentioned it expects general current-quarter income of between $7.8 billion and $8.6 billion, in contrast with analysts’ estimates of $7.15 billion, in line with IBES knowledge from Refinitiv.
Mollenkopf informed Reuters the corporate expects general 5G handset shipments this calendar 12 months to come back in on the high of the corporate’s anticipated vary of 175 million to 225 million items. The corporate additionally raised its forecast for 5G handset shipments for 2021 to a midpoint of 500 million items.
He additionally mentioned Qualcomm has utilized for licenses from the USA authorities to ship chips to Huawei Applied sciences Co Ltd however has acquired response but from U.S. officers.
(Reporting by Munsif Vengattil in Bangalore and Stephen Nellis in San Francisco; Enhancing by Shounak Dasgupta, Maju Samuel and Diane Craft)