Qualcomm shares drop after sales forecast signals weak demand in China over next few quarters
- CEO Steve Mollenkopf said China weakness would be reflected in ‘next couple of quarters’
- Company cites weaker demand for smartphones in China as cause
Qualcomm gave a lacklustre third-quarter sales forecast, citing weaker demand for smartphones in China. The disappointing outlook overshadowed the benefits of settling a prolonged legal dispute with Apple, sending the shares down in extended trading.
Fiscal third-quarter revenue will be US$9.2 billion to US$10.2 billion, the San Diego-based company said Wednesday in a statement. Excluding a one-time payment from Apple, revenue in the current period will be US$4.7 billion to US$5.5 billion. At the midpoint, that fell short of the US$5.26 billion average estimate of analysts, according to data compiled by Bloomberg.
“You’re going to see Chinese weakness reflected in the next couple of quarters,” Chief Executive Officer Steve Mollenkopf said in a telephone interview. Qualcomm won’t disclose the terms of its settlement with Apple or what the iPhone maker will pay in licensing fees but “we ended up with a resolution that’s consistent with our programme,” he said.
Qualcomm stock fell about 3 per cent in extended trading following the quarterly results and forecast. The stock had surged more than 50 per cent since the Apple deal was announced April 16, closing Wednesday at US$86.37 in New York.
The stock decline was amplified by the lack of details offered by Qualcomm executives about Apple’s future royalty payments. That caused confusion among analysts and investors, who peppered executives with questions about the topic during a conference call, said Mike Walkley, an analyst at Cannaccord Genuity.