) is slated to release its third quarter 2012 results on Wednesday,
July 18, after the closing bell. The current Zacks Consensus
Estimate for the second quarter is pegged at 77 cents per share,
representing annualized growth of 21.77%.
With respect to earnings surprises, Qualcomm has outperformed
the Zacks Consensus Estimate in three of the last four quarters.
The average earnings surprise was a positive 3.10%, implying that
the company has outdone the Zacks Consensus Estimate by the same
magnitude in three out of last four quarters.
Second Quarter Highlights
On April 18, 2012, Qualcomm reported its second quarter 2012
financial results. On a GAAP basis, quarterly net income was $1,438
million or 84 cents per share compared with a net income of $1,264
million or 71 cents per share in the year-ago quarter.
However, adjusted EPS (excluding special items) came in at 90
cents for the second quarter of fiscal 2012, outpacing the Zacks
Consensus Estimate of 86 cents. Such outstanding performance was
mainly driven by higher demand for 3G smartphones and tablet
Quarterly total revenue of $4,943 million was up 27.7% year over
year, surpassing the Zacks Consensus Estimate of $4,859
Agreement of Estimate Revisions
In the last 30 days, of the seven analysts covering the stock,
two increased the EPS estimates while two decreased the same for
the third quarter of 2012. Similarly, for the fourth quarter of
fiscal 2012, out of the seven analysts covering the stock, none of
the analysts raised EPS estimates, while five moved in the opposite
For fiscal 2012, over the last 30 days, of the seven analysts
covering the stock, none of the analyst raised EPS estimates while
six slashed theirs. Likewise, for fiscal 2013, in the last 30 days,
out of the seven analysts, only one analyst raised the EPS estimate
while five decreased it.
Analysts are bearish owing to the supply constraints of the 28mm
products, which might impact its top line. They also remain
skeptical about the estimated chipset supply to
) as the company's iPhone is in the transition phase. Additionally,
they believe that overall macroeconomic concerns are also impacting
wireless subscriber growth rates, which can reduce its third
Magnitude of Estimate Revisions
During the last 30 days, the current Zacks Consensus Estimate
was in line with the previous estimate of 77 cents for the third
quarter of 2012 and 3 cents below the earlier estimate of 82 cents
for the fourth quarter of 2012.
Similarly, for fiscal 2012, during the last 30 days, the current
Zacks Consensus Estimate was 3 cents below the earlier estimate of
$3.33. Likewise, for fiscal 2013, the current Zacks Consensus
Estimate was 8 cents below the earlier estimate of $3.86.
The current Zacks Consensus Estimates for the ongoing quarter
reflects a downside of 1.30% (essentially a proxy for future
earnings surprises), while the current Zacks Consensus Estimates
for the fourth quarter remains flat at 0.00%. For fiscal 2012, the
current Zacks Consensus Estimates reflect a downside of 0.30% while
fiscal 2013 estimates contain growth potentials of 0.27%.
We believe that the gradual adaptation of 4G Long Term Evolution
(LTE) handsets in the developed markets of the U.S., Japan, and
South Korea coupled with the massive demand of smartphones and
tablets in the emerging economies will drive the stock upward.
Moreover, the company's record-high earnings, strong balance
sheet and solid management outlook for the current fiscal year will
act as positive catalysts in the long run.
However, stiff competition from formidable rivals like
Texas Instruments Inc.
) as well as lower average selling price (ASP) of smartphones will
negatively impact Qualcomm's royalty business, going forward.
We maintain our long-term Neutral recommendation on Qualcomm
Inc. Currently, QCOM has a Zacks #3 Rank, implying a short-term
Hold rating on the stock.
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