Qualcomm Stock (NASDAQ:QCOM)
Qualcomm (NASDAQ:QCOM) stock dropped more than 5% on Thursday after the firm released its quarterly results report, likely due to investors’ reaction to its gloomy mobile device industry forecast.
Qualcomm cut its profit and revenue forecasts for the fiscal third quarter late Wednesday, below its previous predictions and those of Wall Street analysts. Qualcomm (NASDAQ:QCOM) CEO Cristiano Amon cited the “challenging” state of the mobile phone industry as a major reason for the company’s forecast.
Qualcomm said after Wednesday’s market close that it expects to earn $1.70 to $1.90 per share in its fiscal third quarter, excluding one-time items, on sales of $8.1 billion to $8.9 billion. For the quarter ending in June, Qualcomm was expected to bring in $2.13 per share in earnings on $9.12 billion in revenue.
Qualcomm’s forecast “was disappointing and well below normal seasonal [trends], reflecting ongoing sluggishness in the smartphone market,” according to UBS analyst Timothy Arcuri. However, Qualcomm’s poor forecasting is an isolated incident.
Arcuri, who has a neutral recommendation on Qualcomm’s stock, said the company’s problems may be traced back to a “hangover” from Apple. According to Qualcomm (NASDAQ:QCOM), sales to Apple (NASDAQ:AAPL) will continue to decrease dramatically through the remainder of 2023. The company is actively attempting to broaden its mobile-phone client base. According to Arcuri, Apple is responsible for around $5 billion in yearly revenues for Qualcomm.
According to Arcuri, “even as the [smartphone] market recovers, there are some large chunks of revenue that are going away or potentially at risk, including, of course, Apple,” and Qualcomm’s recent wins with Samsung (OTCPK:SSNLF) “could be temporary.”
Arcuri also reduced his price estimate for Qualcomm shares from $125 to $120.
The Apple issue and “soft margins” add to the headwinds moving against Qualcomm right now, according to analyst Blayne Curtis of Barclay’s. Wall Street was anticipating Qualcomm to deliver a “flat outlook” for its Google Android business.
Despite Curtis’s warnings, “the handset market keeps getting worse,” Investors now have “an interesting entry point” because of the recent drop in Qualcomm stock price, he said, but “there will need to be better evidence of a bottom in the mobile market before the stock can work.”
Featured Image: Pixabay @ Monoar_CGI_Artist
Author Shariq Khan 
