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Qualcomm Tops 3Q Earnings and Rev - Analyst Blog

By: Zacks.com
Posted: 7/25/2013 1:20:00 PM
Referenced Stocks: BRCM;INTC;NVDA;QCOM

Qualcomm Inc. ( QCOM ) reported solid financial results for the third quarter of fiscal 2013, beating the Zacks Consensus Estimate. Management has raised its outlook for fiscal 2013. As a result, in the after market trade on NASDAQ, the stock price of the company was up $2.49 (4.06%) to $63.88. Qualcomm currently has a Zacks Rank #3 (Hold). 

Qualcomm is facing competitive threat from its closest rival, Intel Corp. ( INTC ), which has been redesigning its chipsets for the mobile computing market. Competition is also likely to emanate from formidable rivals like Broadcom Corp. ( BRCM ) and NVIDIA Corp. ( NVDA ). Despite this, the company is maintaining its strong performance on the back of innovative high-end chipsets and a broad global customer base.

Revenues

Quarterly total revenue of $6,243 million was up 35% year over year, surpassing the Zacks Consensus Estimate of $6,030 million. Segment wise, Qualcomm CDMA Technologies businesses contributed $4,222 million of revenues in the third quarter, up 47% over the prior-year quarter. Quarterly EBT margin was 17%. Qualcomm Technology Licensing generated $1,867 million in revenues, up 17% year over year. Quarterly EBT margin was 87%. Qualcomm Wireless & Internet segment generated $158 million, down 1% year over year and its operating loss was $16 million.

Net Income

On a GAAP basis, quarterly net income from continuing operations was $1,580 million or 90 cents per share compared with $1,203 million or 69 cents in the year-ago quarter. In the third quarter of fiscal 2013, adjusted (excluding special items) earnings per share came in at 92 cents, a penny higher than the Zacks Consensus Estimate.

Chipset Statistics

During the third quarter of fiscal 2013, Qualcomm shipped approximately 172 million CDMA-based MSM chipsets, up 22% year over year. This figure was far better than the company's guidance of a mid-point of 168 million. Average selling price of a mobile handset with an in-built Qualcomm chipset during this quarter was $227-$233.

Operating Metrics

Quarterly operating income was $1,677 million compared with $1,382 million in the year-ago quarter. Gross margin was 60% compared with 62.8% in the year-ago quarter. Quarterly operating margin was 26.9% compared with 29.9% in the prior-year quarter. In the reported quarter, the company returned $604 million (35 cents per share) to its shareholders in the form of cash dividends and another $1.04 billion through buyback of 16.7 million shares of common stock.

Cash Flow

During the third quarter of fiscal 2013, Qualcomm generated $2,077 million of cash from operations compared with $922 million in the prior-year quarter. Free cash flow, in the reported quarter, was $1,763 million compared with $523 million in the year-ago quarter.

Liquidity

At the end of the third quarter of fiscal 2013, Qualcomm had $30,402 million versus $26,837 million at the end of fiscal 2012. The company has no outstanding debt.

Fourth Quarter of Fiscal 2013 Financial Guidance

The fourth-quarter revenues will likely be within the range of $5.9 billion - $6.6 billion. Non-GAAP earnings per share will be $1.02 - $1.10. GAAP earnings per share will be within the range of 86 cents - 94 cents. Qualcomm is expected to ship 171 million - 181 million MSM chipsets in the fourth quarter of fiscal 2013.

Full Fiscal 2013 Financial Guidance

The fiscal 2013 revenues will be within the range of $24.3 billion - $25 billion. Non-GAAP earnings per share will be within the range of $4.48 - $4.56. GAAP earnings per share is expected in the range of $3.90 - $3.98. ASP of mobile handset with an in-built Qualcomm chipset during fiscal 2013 will be around $223 - $229.



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