Qualcomm Shares Fall on Disappointing Profit Forecast

Qualcomm Inc. (NASDAQ:QCOM) shares fell as much as 5% in after-hours trading after the company released a disappointing earnings forecast for its fourth quarter. The weaker-than-expected profit guidance overshadowed third-quarter results that beat revenue estimates, signaling persistent challenges for the chipmaker.

Guidance and Q3 Results

For the upcoming fourth quarter, Qualcomm projected adjusted earnings per share (EPS) in a range of $2.05 to $2.25. The midpoint of this range, $2.15, is significantly below the analyst consensus of $2.35, according to Investing.com. The company's revenue guidance for the quarter was more optimistic, forecast between $9.7 billion and $10.5 billion, with a midpoint above the $9.95 billion consensus.

In its third quarter ended June 28, the company reported:

• Adjusted EPS: $2.21, missing the consensus estimate of $2.23.
• Revenue: $9.95 billion, beating the analyst forecast of $9.67 billion. However, this represented a 4% year-over-year decline from $10.37 billion.

Segment Performance

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A sharp decline in Qualcomm's core handset chip business was a primary driver of the results. Revenue from handsets fell 20% year-over-year to $5.09 billion. This weakness was partially offset by strong growth in the company's diversification efforts.

The automotive segment was a standout performer, with revenue surging 61% year-over-year to $1.59 billion, marking its 23rd consecutive quarter of double-digit growth. The Internet of Things (IoT) segment also grew, with revenue up 9% to $1.83 billion. Combined, the automotive and IoT segments saw revenues increase by 28% year-over-year.

Company Outlook

"Despite a challenging memory and supply environment, our third quarter results reflect solid execution of our growth strategy," said Cristiano Amon, President and CEO of Qualcomm. The company noted it is facing a broad-based increase in semiconductor industry input costs across its supply chain.

Qualcomm stated it is implementing measures to reflect these higher costs in its product pricing. The company's licensing division, QTL, posted revenue of $1.28 billion, a 3% decrease from the prior-year period.