Wireless-chip leader Qualcomm crushed Wall Street's targets for the June quarter and guided higher than estimates for the September quarter. But Qualcomm stock fell on Thursday over concerns about weak sales predicted for the December quarter.
The San Diego-based company late Wednesday said it earned an adjusted $2.33 a share on sales of $9.39 billion in its fiscal third quarter ended June 30. Analysts polled by FactSet had expected Qualcomm earnings of $2.25 a share on sales of $9.21 billion. On a year-over-year basis, Qualcomm earnings rose 25% while sales increased 11%.
For the current quarter, Qualcomm expects to earn an adjusted $2.55 a share on sales of $9.9 billion. That's based on the midpoint of its guidance. Analysts were looking for earnings of $2.45 a share on sales of $9.69 billion. In the year-earlier period, Qualcomm earned an adjusted $2.02 a share on sales of $8.67 billion.
"Our third-quarter results reflect strong execution of our growth and diversification strategy," Chief Executive Cristiano Amon said in a news release.
He added, "We are excited about the launch of our Snapdragon X Series solutions for PCs that deliver leading performance, unmatched power efficiency and personalized AI experiences. This launch represents a significant milestone in our transformation from a communications company to a leading intelligent computing company."
Qualcomm Stock Falls On December-Quarter Comments
However, the company's comments on the December quarter worried investors.
JPMorgan analyst Samik Chatterjee said investors had been primed for double-digit revenue growth in the December quarter. But Qualcomm predicted mid-single-digit growth in the quarter, its fiscal Q1, on flat smartphone growth, he said in a client note.
But Chatterjee thinks that early guidance could be conservative.
Still, he cut his price target on Qualcomm stock to 230 from 235, but kept his overweight rating.
On the stock market today, Qualcomm stock dropped 9.4% to close at 164. During the regular session Wednesday, Qualcomm stock jumped 8.4% to close at 180.95 amid a semiconductor stock rally. But chip stocks fell broadly on Thursday.
Qualcomm's chip business accounted for 86% of its revenue in the June quarter. Qualcomm's technology licensing business contributed the rest of its sales.
In its chip segment, handsets accounted for 73% of its revenue, followed by Internet of Things at 17% and automotive at 10%. In fiscal Q3, handset chip sales rose 12% year over year to $5.9 billion. Automotive chip sales jumped 87% to $811 million. But IoT chip sales dropped 8% to $1.4 billion.
Qualcomm stock is on the IBD Tech Leaders list.
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