Following the second quarter earnings announcement on April 19,
most of the analysts covering
) have remained defensive toward the stock. This is due, primarily,
to a weaker chipset sales outlook for fiscal 2012 due to a
manufacturing shortage of its key 28 nanometer chipset
Second Quarter Highlights
On a GAAP basis, quarterly net income from continuing operation
was $1,438 million or 84 cents per share, compared with $1,264
million or 75 cents in the year-ago quarter. Adjusted EPS came in
at 90 cents, easily beating the Zacks Consensus Estimate of 86
Quarterly total revenue of $4,943 million was up 27.7% year over
year, and surpassed the Zacks Consensus Estimate of $4,859 million.
During the second quarter of fiscal 2012, Qualcomm shipped
approximately 152 million CDMA-based MSM chipsets, up 29% year over
year. Gross margin was 63.9%, compared with 72.6% in the year-ago
quarter. Quarterly operating margin was 30.6%, compared with 37% in
the prior-year quarter.
Agreements of Analysts
Of the six analysts covering the stock in the last 7 days, only
one analyst revised the estimate upward for the third and fourth
quarter of fiscal 2012.
For fiscal 2012, out of the six analysts covering the stock in
the last 7 days, only one analyst raised the estimate while none
lowered. Likewise for fiscal 2013, out of the seven analysts
covering the stock, only one analyst increased the estimate for the
We believe that the weaker chipset sales outlook provided by the
company for fiscal 2012, mainly due to a manufacturing shortage of
its key 28 nanometer chipset, have induced the analysts to remain
defensive on the stock.
Currently, the Zacks Consensus Estimate for the third quarter of
fiscal 2012 is 77 cents. The projected annual growth is 21.96%. For
the fourth quarter of fiscal 2012, the Zacks Consensus Estimate of
81 cents indicates an annual gain of 19.61%.
Magnitude of Estimate Revisions
During the last 7 days, the current Zacks Consensus Estimates
for the third and fourth quarter of 2012 remained in line with the
previous estimates of 77 cents and 81 cents, respectively.
However, for fiscal 2012, the current Zacks Consensus Estimates
was just a penny above the prior estimate of $3.32. For fiscal
2013, the current Zacks Consensus Estimates was just a penny above
the earlier estimate of $3.87.
With respect to earnings surprises, the company's consistent
track record of beating estimates in the last four quarters is
expected to persist in the coming quarters. In the last quarter,
Qualcomm outpaced the estimate by 4 cents or 4.65%.
No surprises are expected for the current and fourth quarters of
fiscal 2012. EPS growth potential for fiscal 2012 and 2013 are also
We believe that Qualcomm's record-high earnings, strong balance
sheet, huge product pipelines and better market segmentation will
act as positive catalysts in the long run.
However, weaker outlook, stiff competition from formidable
Texas Instruments Inc.
), coupled with cheaper smartphone sales, will put pressure on
smartphone ASPs, thereby affecting the royalty business of Qualcomm
We maintain our long-term Neutral recommendation on Qualcomm.
Currently, Qualcomm has a Zacks #3 Rank, implying a short-term Hold
rating on the stock.
About Earnings Estimate Scorecard
As a PhD from MIT, Len Zacks proved over 30 years ago that
earnings estimate revisions are the most powerful force impacting
stock prices. He turned this ground breaking discovery into two
of the most celebrating stock rating systems in use today. The
Zacks Rank for stock trading in a 1 to 3 month time horizon and
the Zacks Recommendation for long-term investing (6+ months).
These "Earnings Estimate Scorecard" articles help analyze the
important aspects of estimate revisions for each stock after
their quarterly earnings announcements. Learn more about earnings
estimates and our proven stock ratings at:
BROADCOM CORP-A (BRCM): Free Stock Analysis
QUALCOMM INC (QCOM): Free Stock Analysis Report
TEXAS INSTRS (TXN): Free Stock Analysis Report
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