Qualcomm (NASDAQ: QCOM) reported fourth-quarter results that exceeded Wall Street expectations for both revenue and earnings, while its revenue outlook for the first quarter also came in ahead of forecasts. However, some weaker-than-anticipated earnings forecast weighed on investor sentiment, sending the company’s shares lower in after-hours trading on Wednesday.
Q4 Revenue and Earnings Surpass Estimates
For the fourth quarter, Qualcomm posted adjusted earnings per share (EPS) of $2.17 on revenue of $10.32 billion. This compared with analysts’ estimates of $2.16 in adjusted EPS and $10.12 billion in revenue.
Despite beating quarterly expectations, the company’s performance declined compared with the same period last year, when it recorded adjusted EPS of $3 and revenue of $11.27 billion.
The results highlight continued pressure on some of Qualcomm’s key business segments, particularly its handset operations, even as overall revenue remained above market expectations.
Q1 Revenue Outlook Exceeds Expectations
Qualcomm projected first-quarter revenue in the range of $10.4 billion to $11.2 billion, putting the midpoint above analysts’ expectations of $10.6 billion.
However, its earnings forecast proved less encouraging. The company expects adjusted EPS to range between $2.15 and $2.35, implying a midpoint of $2.25. Wall Street had anticipated earnings of $2.32 per share.
The gap between the earnings forecast and market expectations contributed to the negative stock reaction, overshadowing the stronger revenue guidance.
Handset Business Remains Under Pressure
Qualcomm’s QCT division, which includes handset and automotive operations, generated revenue of $9 billion during the quarter. Although this represented an 8% year-over-year decline, the figure exceeded analysts’ estimates of $8.8 billion.
The handset business accounted for much of the segment’s weakness. Revenue from this division fell 26% year over year to $5.1 billion, missing Wall Street’s projection of $5.3 billion.
The latest results underscore the challenges facing Qualcomm as weakness in its handset operations continues to affect performance. While the company delivered quarterly earnings above expectations and offered a stronger revenue outlook, its below-consensus EPS guidance remains a concern for investors.
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