Qualcomm's guidance for the next fiscal quarter is significantly lower than expected, and it announces a hiring freeze
Shares of chipmaker Qualcomm fell 7% in after-hours trading Wednesday after reporting fourth-quarter earnings that met expectations but poor first-quarter guidance, according to CNBC. Additionally, Qualcomm said it implemented a hiring freeze earlier in the quarter.
Qualcomm's total revenue rose 22% year over year in the quarter ended Sept. 25, according to a statement. The financial report shows that during the reporting period, Qualcomm’s adjusted earnings per share was $3.13, which was in line with market expectations; operating income was $11.39 billion, a year-on-year growth rate of 22%, which was basically in line with expectations.
Regarding guidance, Qualcomm is calling for adjusted EPS of $2.25 to $2.45 on revenue of $9.2 billion to $10 billion in the fiscal first quarter. Analysts polled by Refinitiv had expected earnings of $3.42 a share on revenue of $12.02 billion.
"Given the uncertainty caused by the macroeconomic environment, we are updating our guidance for calendar year 2022 3G/4G/5G handset sales, adjusting from a mid-single-digit year-over-year decline to a low double-digit year-over-year decline. "The rapid deterioration in demand across the semiconductor industry and the easing of supply constraints have led to increased channel inventories," Qualcomm said in the report.
Qualcomm's CDMA technology, or QCT, category revenue totaled $9.9 billion, including smartphone chips, RF front-end components, automotive chips and IoT devices. That figure was up 28 percent, beating the consensus estimate of $9.87 billion by analysts surveyed by StreetAccount.
In the QCT segment, revenue from mobile reached $6.57 billion, up 40% and slightly below the StreetAccount consensus of $6.59 billion. Automotive chips grew 58% annually to $427 million. Qualcomm's IoT business, which makes low-power chips for connected devices, rose 24 percent to $1.92 billion. RF front-end chips fell 20% to $992 million.
Qualcomm Technology Licensing, or QTL, another major segment of Qualcomm that consists of licensing fees related to 5G and other technologies the company manufactures, generated $1.44 billion in revenue, up 8% but below the StreetAccount consensus of $1.58 billion .
On a conference call with investors on Wednesday, CEO Ammon said the semiconductor industry is facing macroeconomic headwinds "that we are not immune to." He added that the company has implemented a hiring freeze and is ready to cut operating expenses further as needed.
"We remain well-positioned to deal with near-term headwinds," Ammon stressed on the conference call that the company is facing a "temporary cyclical inventory drawdown."
A spokesperson told CNBC that the hiring freeze will be implemented in early fiscal 2023.
