Qualcomm's Earnings (QCOM) Great but Could Have Been Better

The only thing overshadowing Qualcomm’s (NASDAQ: QCOM) satisfactory quarterly earnings, posted on Feb. 1, is Broadcom (NASDAQ: AVGO) raising its bid. Last week (on Feb 4), AVGO bid $120 billion for Qualcomm but the market yawned. There is little reason to believe a deal will go through. Management does not want it and shareholders of NXP Semiconductor (NASDAQ: NXPI) want more.

In Qualcomm’s first quarter, the company reported strong semiconductor business and demand for 3G/4G. 5G is fast approaching, so the company is expanding into new markets. Signing a multi-year QCT strategic partnership with Samsung will prove valuable as the company fights of a hostile buyout offer from Braodcom.

Qualcomm reported revenue meeting its guidance and EPS of $0.98 a share beating the $0.85-$0.95 estimate. QCT EBIT margin was above guidance but QTL EBT margin % of 68% met the low end of guidance.


In Q2, QCOM forecasts earnings of $0.65 - $0.75 a share. EBT margin will fall slightly. The over results could have been higher but Apple’s (NASDAQ: AAPL) unwillingness to pay the royalties owed is holding back revenue. Until the companies come to agreed terms, QCOM stock will underperform.