Q2 Preview: Qualcomm (QCOM) May Have Strong Shipments, But What About Margins?


Shares of Qualcomm (Nasdaq: QCOM) are trading very modestly lower Wednesday heading into the company's second-quarter 2012 earnings report, expected out after the market closes.

The Street is looking for EPS of 95 cents on revenue of $4.82 billion. The estimates compare with EPS of 86 cents and revs of $3.87 billion reported in the same period last year. With its first-quarter report on February 1st, Qualcomm issued second-quarter guidance for EPS of 91 cents to 97 cents.

Shares of Qualcomm moved about 25 percent higher in the quarter to $68.06 at the end of March. Qualcomm shares ended 2011 about 12.3 percent higher. Shares are 1.6 percent lower since the end of March, as markets have struggled through the better part of April.

Investors might get a taste of what's to come for Qualcomm by taking a peek at peer Intel's (Nasdaq: INTC) quarterly numbers. Though Intel beat on the top and bottom lines, margin compression has investors questioning the ability to keep profits up and input costs rise. For more on Intel's numbers, click here .

Data from Bloomberg has 38 analysts at Buy on Qualcomm, six with a Hold, and two at Sell. The analyst price target average is $72, ranging from $60 to $85.

Analyst Comments
  • Goldman Sachs sees revs of $4.95 billion and EPS of 99 cents. Goldman noted: "Recall that our March quarter Qualcomm Technology Licensing (QTL) revenue estimate of $1,708 mn (up 19% qoq) is driven by handset and smartphone sales one quarter in arrears. In other words, QTL revenues will benefit from the strong December quarter handset unit sales, specifically the iPhone 4S."

    Goldman sees MSM shipments of 152 million, up 29 percent on a year-over-year basis.

  • JPMorgan is looking for EPS of 94 cents and revs of $4.8 billion. MSM shipments should be about 151 million, with continued strength in iPhone and Samsung Galaxy series shipments creating the possibility for upside to second-quarter forecasts.

    JPMorgan sees QTL unit ships of 229 million, up 16 percent from last year.

    On new chips, JPMorgan commented, "We believe that shortages of 28nm parts are emerging as a short term issue for QCOM. The good news is that the company's designs continue to win on the basis of higher levels of integration and, in the case of basebands, a broader range of radio technologies."
Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out Qualcomm's past performance at Streetinsider's Qualcomm's Income Statement .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks

Referenced Stocks: INTC , QCOM



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