Qualcomm Inc. (QCOM) reported solid financial results for the second quarter of fiscal 2013 that meet the Zacks Consensus Estimate. Management has raised its outlook for fiscal 2013 primarily due to the gradual adoption of LTE networks in North America, rapid transition from 2G to 3G in China and India, and increasing licensing revenue.
However, the revised guidance fell below the current Zacks Consensus Estimate. As a result, in the after market trade on NASDAQ, the stock price of Qualcomm was down by $3.80 (5.76%) to $66. The company is facing severe competitive threat from its closest rival Intel Corp. (INTC), which has been redesigning its chipsets for the mobile computing market. Competition is also likely to emanate from formidable rivals like Broadcom Corp. (BRCM) and NVIDIA Corp. (NVDA). Qualcomm currently has a Zacks Rank #1 (Strong Buy).
Revenues
Quarterly total revenue of $6,124 million was up 23.9% year over year, surpassing the Zacks Consensus Estimate of $6,091 million. Segment wise, Qualcomm CDMA Technologies businesses contributed $3,916 million of revenues in the second quarter, up 28% over the prior-year quarter. Quarterly EBT margin was 17%. Qualcomm Technology Licensing generated $2,057 million in revenues, up 19% year over year. Quarterly EBT margin was 88%. Qualcomm Wireless & Internet segment generated $155 million, down 3% year over year and its operating profit was zero.
Net Income
On a GAAP basis, quarterly net income from continuing operations was $1,866 million or $1.06 per share compared with a net income of $1,438 million or 86 cents per share in the year-ago quarter. In the second quarter of fiscal 2013, adjusted (excluding special items) earnings per share came in at $1.05, exactly in line with the Zacks Consensus Estimate.
Chipset Statistics
During the second quarter of fiscal 2013, Qualcomm shipped approximately 173 million CDMA-based MSM chipsets, up 14% year over year. This figure was far better than the company’s guidance of a mid-point of 168 million. Average selling price of a mobile handset with an in-built Qualcomm chipset during this quarter was around $214 -$220.
Operating Metrics
Quarterly operating income was $1,877 million compared with an operating income of $1,514 million in the year-ago quarter. Gross margin was 61.3% compared with 63.9% in the year-ago quarter. Quarterly operating margin was 30.7% compared with 30.6% in the prior-year quarter. In the reported quarter, the company returned $431 million (25 cents per share) to its shareholders in the form of cash dividends.