Print 11 comment(s) - last by Milliamp.. on Nov 10 at 11:23 PM

  (Source: Qualcomm)
Massive profit bests even the highest analyst expectation

It's relatively rare to see every single analyst miss when forecasting a company's earnings.  When that happens, you know the news is either very good -- or very bad.

I. A Pleasant Sort of Surprise

Fortunately for Qualcomm, Inc. (QCOM), it falls under the former category.  On Tuesday it announced its fiscal Q4 2012 results [PDF].  The San Diego, Calif.-based smartphone chipmaker revealed that in the quarter ending in September it made $4.87B USD in revenue and $1.27B USD in net income (profit).

Analysts had predicted a solid, but sleepier $4.66B USD revenue haul, with the actual results approaching the high end of 37 estimates collected by the UK financial analysis agency The Financial Times.

But the big surprise was the profit.  Analysts had expected only $1.16B USD in profit.  Even the most optimistic analyst only predicted $1.24B USD in profit ($0.87 USD/share).  In other words Qualcomm blew away all the predictions regarding profit, and smoked the average expectation by 9 percent.

Qualcomm Snapdragon on Nokia
[Image Source: Jason Mick/DailyTech]

Dr. Paul E. Jacobs, chairman and CEO of Qualcomm, cheered the strong performance, commenting, "I am very pleased with our performance this year. We delivered record revenues, earnings and MSM chipset shipments driven by increasing global consumption of wireless data across a diverse range of devices, particularly smartphones."

The chipmaking chief predicts "double-digit revenue growth" in fiscal 2013, driven on the back of the company's core chipset and system-on-a-chip businesses.

II. Future Looks Bright

In the fiscal Q4, Qualcomm shipped 141 million Snapdragon chipsets globally, an 11 percent rise from 2011.  Additionally, an estimated 210 to 214 million devices sold carried a Qualcomm 3G/4G chip.

Qualcomm makes its system-on-a-chip central processing units based on licensed instruction sets and intellectual property cores from UK reduced instruction set computer (RISC) architecture giant ARM Holdings plc (LON:ARM).  Currently, Qualcomm's big push involves the 28 nm Snapdragon 4, manufactured by Taiwan Semiconductor Manufacturing Comp., Ltd. (TPE:2330and Samsung Electronics Comp., Ltd. (KSC:005930).  While many Snapdragon 4 chips are destined for traditional Android smartphones/tablets, the Qualcomm chips are also popping up in Windows 8 tablets, a pivotal new business target.

Samsung Ativ Tab
The Windows RT Samsung Ativ Tab carries a Snapdragon 4 SoC.

Qualcomm, which offers a quarterly dividend to shareholders, has also been repurchasing stock to further share its profits with investors.  The company is currently sitting on $26.8B USD in cash, meaning that it has a lot of money for acquisitions, should it choose to make a move.

Compared to some other ARM-architecture chipmakers like NVIDIA Corp. (NVDA), Qualcomm's Q1 2013 outlook is relatively optimistic.  Despite a slowing semiconductor and device market, the Californian company hopes to sustain double-digit growth in many metrics over the holiday.  The only expected dip is in diluted shares, as Qualcomm moves to shutter its discontinued Flo TV business.

Sources: Qualcomm, FT [analyst estimates]

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Sad to think about but
By chizow on 11/8/2012 1:53:44 PM , Rating: 3
Qualcomm is making a killing on the technology AMD/ATI sold them for a bag of peanuts. ~$68m I believe, what amounted at the time to an interest payment or corporate bonuses.

Now Qualcomm's quarterly *PROFITS* amount to about the same total as all of AMD's quarterly revenue. That's one hell of a turnabout.

RE: Sad to think about but
By Guspaz on 11/8/2012 5:05:57 PM , Rating: 3
That's not Qualcomm's fault, it just illustrates that AMD mismanaged their assets; they didn't know what to do with what they had.

RE: Sad to think about but
By arjunp2085 on 11/8/2012 7:19:51 PM , Rating: 2
AMD Should Be bought By QualComm ..

AMD Lacks Low power Expertise and Qualcomm High Computation and Graphic Workloads

These Two companies Complement each other..

Qualcomm management seems to know what they are doing .. Compared to what AMD and its Board are doing...

RE: Sad to think about but
By xype on 11/9/2012 5:58:35 AM , Rating: 2
Depends a bit on how transferrable AMDs x86 licencing agreements are—but potentially not a bad idea. The only downside would be that it would probably take 2-3 years before we would see and results from the purchase, which could be enough for Atom to catch on more.

RE: Sad to think about but
By Milliamp on 11/10/2012 11:23:30 PM , Rating: 2
x86-64 is an AMD architecture but I see your point (with their cross licensing agreement with Intel).

RE: Sad to think about but
By bug77 on 11/9/2012 7:38:58 AM , Rating: 2
I don't think AMD/ATI had a choice at the time. The mobile devices fever had not taken off at the time and they were in desperate need of cash. In these situations, you have to sell something that's profitable. Or go out of business.

RE: Sad to think about but
By dagamer34 on 11/10/2012 10:09:37 PM , Rating: 2
I'm pretty sure Qualcomm gets chosen in products because of its CPU and radio basebands, not because of it's GPU performance. And hindsight is always 20/20.

By xype on 11/8/2012 11:58:40 AM , Rating: 4
…but I keep thinking "blowing away analyst expectations" looks more like over 20% or more in profit/revenue, not less than 10%. I mean, if you want to look at it from a different angle; on $4,870 Million revenue they made $30 million more profit than the "most optimistic" analyst predicted.

While certainly good results, that’s not "blowing away" expectations. But then, this is no AnandTech, either…

By System48 on 11/9/2012 12:08:02 PM , Rating: 2
This is actually consistent with Wall Street terminology. It makes no sense but it's how they see going $30mil over expectations. So basically 4.5% revenue above expectations and 9.4% profit above expectations is earth shattering on Wall Street.

By Proposer88 on 11/9/2012 11:49:20 PM , Rating: 2
Anand should buy DailyTech. That's an M&A I'd be happy with!

By Pirks on 11/8/2012 12:22:46 PM , Rating: 2
When he chooses Qualcomm to be the WP8 SoC provider

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