Qualcomm quarterly report shows 44pc slump in profits

5 Nov 2015

As it continues its struggles within the Chinese market, chip maker Qualcomm has released its Q4 report, showing a worrying 44pc slump in profits – worrying, but close to what had been expected.

Publishing its report, Qualcomm said that posted revenues of $5.5bn represent a drop of 19pc on the same period last year. Additionally, earnings per share dropped by 28pc, to $0.91 per share.

According to Forbes, however, this has beaten the estimates set by market analysts at the New York Stock Exchange, who had predicted that Qualcomm would post Q4 revenues of only $5.21bn.

Most notably, shipments of chips for mobile phones saw further decline of 14pc on the same time last year, with only 203m units sent out.

One of the biggest challenges Qualcomm has faced in recent times has come from China, where the company is facing persistent difficulties in regard to the licensing of its 3G and 4G communications technology – contract negotiations are dragging on longer than expected.

This same issue led to the Chinese government taking out an antitrust investigation against Qualcomm, with a fine of nearly $1bn landing with the chip manufacturer.

Optimism, despite slump

It is estimated that the number of 3G and 4G devices sold this year equates to 275bn, but revenue has only been collected from 251bn.

Then, of course, Samsung’s decision to drop Qualcomm as its chip provider for the Galaxy S6 earlier this year left them down one valuable customer.

Despite the apparent challenges facing the company financially, Qualcomm has stated that it is optimistic for the future, with close to $31bn in cash reserves on hand to fund future acquisitions, as well as the company returning $14.1bn in cash to shareholders.

Qualcomm’s CEO, Steven Mollenkopf, said in the report statement, “Our fiscal fourth quarter revenues and EPS were at the high end of our expectations, with stronger-than-expected MSM chipset shipments offsetting slower than expected progress concluding new license agreements in China.”

He went on to say, “We are encouraged by customer reaction to our flagship Snapdragon 820, are on track to deliver on our fiscal 2016 cost reduction targets and expect to exit fiscal 2016 on an improving financial trajectory.”

Qualcomm sign image via Nathan Rupert/Flickr

Colm Gorey was a senior journalist with Silicon Republic