) is slated to release its fourth-quarter fiscal 2012 results on
Wednesday, November 7, after the market closes. The Zacks
Consensus Estimate for the reported quarter is pegged at 70
cents, representing an annualized growth of 3.53%.
With respect to earnings surprises, Qualcomm has outperformed
the Zacks Consensus Estimate in two of the last four quarters
with an average beat of 1.40%.
Third Quarter Recap
On July 18, 2012, Qualcomm reported its third-quarter fiscal
2012 financial results. Quarterly GAAP net income was
approximately $1,207 million or 69 cents per share against $1,035
million or 61 cents per share in the prior-year quarter. Adjusted
earnings per share (excluding special items) of 73 cents in the
reported quarter fell short of the Zacks Consensus Estimate of 77
Quarterly total revenue surged 28% year over year to $4,626
million, but was below the Zacks Consensus Estimate of $4,690
million. Quarterly operating income was $1,382 million compared
with $1,113 million in the year-ago quarter. Quarterly operating
margin was 30% compared with 31% in the year-ago quarter.
Agreement of Estimate Revisions
In the last 30 days, out of the total 10 estimates, one
estimate moved south while none went up for the fourth quarter of
fiscal 2012. The trend remains similar for the first quarter of
fiscal 2013 as well.
For fiscal 2012, out of the total 9 estimates one estimate
moved south while none moved in the opposite direction in the
last 30 days. A similar picture could be seen for fiscal 2013,
with one out of 10 estimates moving down while none moved up in
the past one month.
Magnitude of Estimate Revisions
Over the last 30 days, the current Zacks Consensus Estimate
has deteriorated by a penny for both fourth quarter of fiscal
2012 and first quarter of fiscal 2013. The current Zacks
Consensus Estimate remained static at $3.19 for fiscal 2012 over
the last 30 days, while the estimate has deteriorated by 2 cents
to $3.71 for 2013 over the same time frame.
We believe that the gradual adaptation of 4G LTE handsets in
the developed markets of the U.S., Japan and South Korea coupled
with the huge demand of smartphones and tablets in the emerging
economies will drive the stock upward. Moreover, Qualcomm's
flagship snapdragon platform has emerged as a major chipset
supplier for Apple's iPhone 5 which may become a potential growth
driver for the company in the near future.
However, stiff competition from rivals like
Texas Instruments Inc.
) as well as lower ASP of smartphones will negatively impact
Qualcomm's royalty business going forward.
We maintain our long-term Neutral recommendation on Qualcomm
Inc. Currently, the company retains a Zacks #3 Rank, implying a
short-term Hold rating.
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