Qualcomm's Q4 income surges on increased sales

California-based company’s net income in quarter ended on September 25 jumped to nearly $2.9bn

Qualcomm’s diluted earnings per share jumped 4 per cent to $2.54 in the fourth quarter. Reuters

US-based chip maker Qualcomm reported a 3 per cent surge in its fourth-quarter net income, driven by double-digit growth in the company's equipment and services business arm.

The California-based company’s net income in the quarter ended on September 25 jumped to nearly $2.9 billion, almost $75 million more than the same period last year.

The company’s revenue during the July-September period surged 22 per cent on an annual basis to almost $11.4bn, the company said in a statement.

Its equipment and services division contributed 86 per cent to total revenue. It surged 28.4 per cent to $9.8bn in the last quarter, whereas the licensing arm’s revenue dropped 6.7 per cent on a year-on-year basis to nearly $1.6bn.

Qualcomm’s diluted earnings per share jumped 4 per cent to $2.54.

Qualcomm's president and chief executive Cristiano Amon. Reuters

“We are pleased to report another strong year, despite the macroeconomic challenges, as we continue to execute our strategy of transforming Qualcomm from a wireless communications company for the mobile industry to a connected processor company for the intelligent edge,” the company’s president and chief executive Cristiano Amon said.

Following the earnings announcement, Qualcomm’s stock dropped almost 7 per cent to $104.8 a share in after-hours trading. The stock, which closed 4.1 per cent down at $112.5 on Wednesday, has dropped more than 18 per cent in the past 12 months.

Qualcomm’s full-year net income jumped 43 per cent yearly to $12.9bn, while sales soared 32 per cent to $44.2bn during the period.

Qualcomm is one of the world’s leading wireless technology innovators and the driving force behind the expansion of the 5G network. Its technologies are found in every almost 3G, 4G and 5G smartphone.

Given the uncertainty caused by the macroeconomic environment, the company updated its guidance for 3G/4G/5G handset volumes from a year-over-year mid-single-digit percentage decline, to a low double-digit percentage decline.

The rapid deterioration in demand and easing of supply constraints across the semiconductor industry have resulted in elevated channel inventory, Qualcomm said.

“Due to these elevated levels, our largest customers are now drawing down on their inventory, negatively impacting the midpoint of our EPS guidance for the first quarter of fiscal 2023 by approximately $0.80,” it added.

While our financial outlook is being temporarily impacted by elevated channel inventory, our diversification strategy and long-term opportunities remain unchanged

Cristiano Amon,
Qualcomm's president and chief executive

Qualcomm expects its fiscal 2023 first quarter (October-December) revenue to hover between $9.2bn and $10bn. It predicts its diluted earnings per share to drop between $1.72 and $1.92 range.

“While our financial outlook is being temporarily impacted by elevated channel inventory, our diversification strategy and long-term opportunities remain unchanged,” Mr Amon said.

The global semiconductor industry faced its most challenging period last year as a surge in electronic device sales during the Covid-19 pandemic triggered a bigger-than-anticipated demand, leading to a severe shortage in the industry.

Signs of Qualcomm and 5G at Mobile World Congress in Shanghai. Reuters

Qualcomm’s research and development expenses surged 16 per cent annually to $2.2bn in the fourth quarter. It was almost 20 per cent of the company’s total revenue earned in the September quarter.

Its cash, cash equivalents and marketable securities stood at more than $6.3bn as of September 25.