Wireless-chip giant Qualcomm has joined the parade of chipmakers guiding below Wall Street's estimates for the March quarter. Qualcomm stock and other semiconductor stocks vacillated on Friday.
Chipmakers offering weak outlooks this earnings season have been mostly those exposed to personal computers and smartphones.
Late Thursday, Qualcomm said its smartphone chip sales dropped 18% year over year to $5.75 billion in the December quarter as handset demand weakened. But revenue from Internet-of-Things, or IoT, chips rose 7% to $1.68 billion and automotive chip sales jumped 58% to $456 million.
All told, Qualcomm earned an adjusted $2.37 a share on sales of $9.46 billion in its fiscal first quarter ended Dec. 25. Analysts polled by FactSet had expected earnings of $2.36 a share on sales of $9.6 billion. On a year-over-year basis, Qualcomm earnings fell 27% while sales declined 12%.
For the current quarter, Qualcomm forecast adjusted earnings of $2.15 a share on sales of $9.1 billion, based on the midpoint of its outlook. Wall Street had predicted earnings of $2.29 a share on sales of $9.56 billion in the March quarter.
Qualcomm Stock Falls After Report
On the stock market today, Qualcomm stock dropped as much as 5.4% after the opening bell before rebounding. It ended the day down 0.6% to 135.02.
UBS analyst Timothy Arcuri reiterated his neutral rating on Qualcomm stock after the report.
"Channel inventory digestion coupled with continued demand softness across several end markets will be more of a headwind than previously anticipated," Arcuri said in a note to clients. "Similar to commentary from Qorvo, Qualcomm now sees inventory headwinds persisting through the June quarter for both its handset and IoT businesses."
Other semiconductor stocks reacting to weak outlooks for the March quarter this earnings season have included Advanced Micro Devices, Intel, Qorvo, Synaptics and Texas Instruments.
Bucking the trend with beat-and-raise earnings reports were Allegro MicroSystems, Microchip Technology and Silicon Labs. They have greater exposure to automotive, industrial and Internet-of-Things markets.
The Philadelphia semiconductor index, known as SOX, fell 1.9% on Friday. The SOX includes the 30 largest semiconductor stocks traded in the U.S.
Microchip Stock Rises On Earnings Beat
Late Thursday, Microchip Technology beat expectations for December quarter and guided higher for the March quarter.
Microchip earned an adjusted $1.56 a share on sales of $2.17 billion in its fiscal third quarter ended Dec. 31. Analysts were looking for earnings of $1.55 a share on sales of $2.16 billion. On a year-over-year basis, Microchip earnings jumped 30% while sales climbed 23%.
For the current quarter, Microchip forecast adjusted earnings of $1.62 a share on sales of $2.22 billion. Wall Street was modeling earnings of $1.58 a share on sales of $2.19 billion.
Microchip stock rose 1% to 85.34 on Friday.
Microchip stock ranks second out of 31 stocks in IBD's semiconductor manufacturers industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 98 out of 99.
Meanwhile, Qualcomm stock ranks No. 14 out of 34 stocks in IBD's fabless semiconductor industry group. It has an IBD Composite Rating of 74.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
