“What we have seen in the smartphone markets is a combination of weak demand and prolonged Covid in China,” said CEO Cristiano Amon.
Qualcomm (QCOM) – Get QUALCOMM Incorporated Report shares slumped lower Thursday after the smartphone chipmaker forecast weaker-than-expected near-term profits amid the ongoing Covid restrictions in China and downturn in broader consumer demand.
Qualcomm, which topped Street profit forecasts with an adjusted bottom line of $3.13 for the three months ending in September, its fiscal fourth quarter, also posted overall revenues of around $11.4 billion.
The chipmaker, which supplies its Snapdragon X65 modem for the new Apple (AAPL) – Get Apple Inc. Report iPhone 14, said revenues over the current period would likely come in between $9.2 billion and $10 billion, well shy of analysts’ estimates, citing what it called the “rapid deterioration in demand and easing of supply constraints across the semiconductor industry.”
Profits for its first first quarter are likely to fall to around $2.45 per share, Qualcomm said, thanks to a likely 80 cents per share hit from big customers “drawing down on their inventory” as broader demand weakens thanks to deterioration of the macroeconomic environment and sustained Covid restrictions in China.”
Stocks Lower in Fed Wake, eBay, Roku, Qualcomm And Starbucks In Focus – Five Things To Know
“What we have seen in the smartphone markets is a combination of the weakness of demand, which is related to basically the macroeconomic headwinds, and the prolonged Covid in China,” CEO Cristiano Amon told investors on a conference call late Wednesday.
Amon also noted that last year’s supply-chain disruptions, which caused customer’s to overstock their inventories, are now resolved, but now, “with the macroeconomic uncertainty, you have a drawdown to bring inventory to a different level than it was during the situation of demand constraint. That’s the big issue, really.”
Qualcomm shares were marked 7.1% lower in pre-market trading to indicate an opening bell price of $104.53 each, a move that would extend the stock’s year-to-date decline to around 43%.
