Qualcomm Inc. QCOM reported impressive financial results in the second quarter of fiscal 2016 wherein both the top and the bottom line steered past the Zacks Consensus Estimate.
Net Income
On a GAAP basis, quarterly net income from continuing operations stood at $1,164 million or 78 cents per share compared with $1,053 million or 63 cents, respectively, in the year-ago quarter. Meanwhile, adjusted (excluding special items) earnings per share came in at 89 cents, beating the Zacks Consensus Estimate of 82 cents.
Revenue
Quarterly total revenue of $5,551 million was down 19.5% year over year. However, this figure outpaced the Zacks Consensus Estimate of $5,296 million. Segment-wise, Qualcomm CDMA Technologies businesses contributed $3,337 million to revenues in the second quarter, down 24.7% from the prior-year quarter. Quarterly EBT margin stood at 5%. Qualcomm Technology Licensing generated $2,135 million in revenues, down 11.6% year over year. Quarterly EBT margin was 87%.
Chipset Statistics
During the second quarter of fiscal 2016, Qualcomm shipped approximately 189 million CDMA-based MSM chipsets, down 18.9% year over year. This figure managed to surpass the mid-point of the company’s guidance which was pegged at 185 million. Average selling price (ASP) of a 3G/4G handset with an in-built Qualcomm chipset during the quarter was around $205--$211. The company’s chipsets are used in Apple Inc.’s AAPL iPhone, Alphabet Inc. GOOGL-developed Android smartphones and Microsoft Corp.’s MSFT Windows handsets.
Operating Metrics
Quarterly operating income came in at $1,415 million compared with $1,336 million in the year-ago quarter. Quarterly operating margin was 25.5% versus 19.4% in the prior-year quarter. Quarterly adjusted EBT was $1,897 million compared with $2,938 million in the year-ago quarter. In the reported quarter, the company returned nearly $710 million (48 cents per share) to its shareholders in the form of cash dividends and another $1.5 billion through the repurchase of 31.7 million shares of common stock.
Cash Flow
During the second quarter, Qualcomm generated $737 million of cash from operations against a consumption of $658 million in the prior-year quarter. Free cash flow, in the reported quarter, was $612 million as against a negative $854 million in the year-ago quarter.
Liquidity
At the end of the quarter under review, Qualcomm had $5,775 million of cash and cash equivalents and $11,942 million of outstanding debt on its balance sheet compared with $7,560 million and $10,969 million, respectively, at the end of fiscal 2015.