Despite lagging the Zacks Consensus Estimate in the third
quarter of 2012 and slashing its outlook for fiscal 2012,
Qualcomm Inc
's (
QCOM
) share price surged 5.80% ($3.25) to $64.79 in the after market
trade on NASDAQ, primarily based on increased deployment of 3G/4G
networks across the emerging nations and the company's optimism to
resolve the supply chain issue of MSM 8960 Snapdragon processor by
teaming up with
Taiwan Semiconductor Manufacturing Company Ltd.
(
TSM
) and
United Microelectronics Corporation
(
UMC
).
Revenue
Quarterly total revenue of $4,626 million increased 28% year
over year but was below the Zacks Consensus Estimate of $4,690
million. Segment wise, Qualcomm CDMA Technologies businesses
accounted for $2,869 million of the total revenue in the third
quarter, up 31% year over year. Quarterly EBT margin was 16%.
Qualcomm Technology Licensing generated revenue of $1,593 million,
up 27% year over year. Quarterly EBT margin was 88%. Qualcomm
Wireless & Internet segment generated $160 million in revenue,
down 2% year over year. This division incurred an operating loss of
$6 million in the year-ago quarter.
EPS
On a GAAP basis, quarterly net income from continuing operation
was $1,207 million or 69 cents per share compared with $1,035
million or 61 cents per share in the year-ago quarter. However,
adjusted EPS (excluding special items) came in at 73 cents, missing
the Zacks Consensus Estimate of 77 cents.
Chipset Statistics
During the third quarter of fiscal 2012, Qualcomm shipped
approximately 141 million CDMA-based MSM chipsets, up 18% year over
year. However, this was below the company's guidance of a mid-point
of 148 million. Average selling price of mobile handset with an
in-build Qualcomm chipset during this quarter was around $226
-$232.
Operating Metrics
Quarterly operating income was $1,382 million compared with
$1,113 million in the year-ago quarter. Gross margin was 64.4%
compared with 64.7% in the year-ago quarter. Quarterly operating
margin was 30% compared with 31% in the year-ago quarter. In the
reported quarter, the company returned $429 million (25 cents per
share) to its shareholders in the form of cash dividend.
Cash Flow
During the third quarter of fiscal 2012, Qualcomm generated $922
million of cash from operations compared with $1,264 million in the
prior-year quarter. Free cash flow (cash flow from operations less
capital expenditures) during the reported quarter was $523 million
compared with $1,045 million in the year-ago quarter.
Liquidity
At the end of third quarter of fiscal 2012, the company had
$13,395 million in cash & marketable securities and $968
million of outstanding debt on its balance sheet compared with
$11,652 million in cash & marketable securities and $994
million of outstanding debt at the end of fiscal 2011.
Fourth Quarter of Fiscal 2012 Financial Guidance
Total revenue is projected the range of $4.45 billion - $4.85
billion. Its mid-point of $4.65 billion is below the current Zacks
Consensus Estimate of $4.903 billion. Non-GAAP EPS (including
share-based compensation expenses) is expected in the range of 78
cents - 84 cents. Its mid-point of 81 cents is significantly above
the current Zacks Consensus Estimate of 77 cents. Qualcomm is
expected to ship 134 million - 142 million MSM chipsets during the
quarter.
Full Fiscal 2012 Financial Guidance
Total revenue is forecasted in the range of $18.7 billion -
$19.1 billion. Non-GAAP EPS (including share-based compensation
expenses) is expected in the range of $3.61 - $3.67. Mobile handset
ASP with an in-build Qualcomm chipset during fiscal 2012 will be
around $216 -$222.
Recommendation
We reaffirm our long-term Neutral recommendation on Qualcomm.
Currently, it holds a short-term Zacks #3 Rank (Hold) on the
stock.
QUALCOMM INC (QCOM): Free Stock Analysis Report
TAIWAN SEMI-ADR (TSM): Free Stock Analysis
Report
UTD MICROELECTR (UMC): Free Stock Analysis
Report
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