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Qualcomm Earnings Analysis, FY 1Q15

Qualcomm Earnings Analysis, FY 1Q15

This IDC update provides a review and analysis of Qualcomm's earnings in the first quarter of fiscal year 2015. Qualcomm reported FY 1Q15 (CY 4Q14) results on January 28, 2015, after the close of market. Revenue and adjusted EPS came in at $7.1 billion and $1.34, ahead of Wall Street consensus expectations of $6.92 billion and $1.28 per share, respectively.

Qualcomm's strong earnings were overshadowed by a weak 2015 outlook in the company's QCT (chips) segment because of a mix shift in OEM market share, Snapdragon's losses at a major customer (which we believe is Samsung), and heightened 4G competition. Qualcomm now expects FY15 revenue to be in the $26–28 billion range, about $800 million less than Wall Street consensus estimate ranges of $26.8–28.8 billion, and earnings to be in the range of $4.04–4.34 versus expectations of $4.33–4.63.

The QTL (IP) division continued to face challenges from the Chinese National Development and Reform Commission's (NDRC's) investigation, increased price pressure on smartphones in the Chinese market resulting in lower royalties, and underreporting of device shipments from Chinese OEMs resulting in reduced IP royalties. On the bright side, Qualcomm reported that it had settled a dispute with a major licensee in the Chinese market and that the NDRC investigation was "progressing toward resolution."

Please Note: Extended description available upon request.


In This Update
Summary
Positive Signs But Persistent Uncertainty in China
Uncertain Outlook for Consolidated Chinese OEM Market Structure
NDRC Investigation and Underpayment of Royalties by Chinese OEMs
Resolution of Dispute With "Major Chinese Licensee"
Qualcomm Facilitating Chinese Export Market Objectives
Loss of Snapdragon 810 Opportunity at Samsung
Increase in Market Share of Apple Phones and Reduced BOM Mix
China 4G Chipset Price Competition and Increasing Mix of Lower-Priced Smartphones
Additional Opportunities on the Horizon
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