Qualcomm released its second fiscal quarter earnings report on Wednesday, making a solid forecast for the current third fiscal quarter sales. It also said China, the world's largest smartphone market, has largely returned to normal levels.
Qualcomm: China's mobile phone market demand "very close" to normal levels
Qualcomm said in a statement Wednesday that the company's third-quarter revenue will be between $4.4 billion and $5.2 billion, compared with the average analyst estimate of $4.77 billion. Excluding certain items, the company said earnings per share would be $0.60 to $0.80.
Qualcomm CEO Steve Mollenkopf said, "It's safe to say that China is a role model and you'll see an improvement in the third fiscal quarter." Demand for smartphones in China is "very close to normal, and the 5G mix is better than we expected."
Mollenkopf added that the supply issue has largely been resolved and future sales will depend on the level of consumer spending.
Qualcomm stock rose about 3 percent to close at $78.97 in after-hours trading in New York. Qualcomm's stock has fallen 10% this year.
Qualcomm said second-quarter revenue grew 4.7 percent to $5.2 billion, in the company's previous expectations for the midpoint. Net profit fell to $468 million, or $0.41 per share, compared with net profit of $663 million, or $0.55 per share, in the prior year period. Earnings per share, excluding certain items, were $0.88, compared to the average Wall Street analyst estimate of $0.78.
Qualcomm has tied its business success to the worldwide rollout of 5G networks, which are expected to deliver dramatically higher data speeds, a prospect that has prompted many consumers to extend their use of their existing phones and wait for device performance improvements. Qualcomm warns that demand for 5G phones won't show up until later this year.
Mollenkopf said that China has invested heavily in building 5G networks, and North America has continued to deploy them. Some parts of Europe have been affected by the epidemic and the process has slowed down. Despite this, Qualcomm maintains its forecast of 175 million to 225 million 5G phone shipments this year. These phones all require more expensive Qualcomm chips.
