Rising 5G demands help Qualcomm beat revenue estimates and forecast

Qualcomm Inc on Wednesday came posting Wall Street beating profit and revenue for second quarter and shared an expectations-aligned outlook for current quarter.

The company succeeded to post beating results largely because of its comparatively costlier smartphone chips. Moreover, at a time when impact of the novel coronavirus came disrupting the production lines at factories and resulted in slower smartphone demands, singing more number of contracts for supply of those chips for 5G phones also help it forecast current-quarter revenue that almost met analysts’ expectations.

According to IBES data from Refinitiv, analysts were estimating Qualcomm generating total revenue of $4.89 billion in current quarter while the world’s biggest supplier of modem chips shared revenue forecast of between $4.4 billion and $5.2 billion for the same period.

The maker of modem chips that connect mobile phones and other devices to wireless data networks sold its chips at an average price of $31.8 in the second quarter which previously was $23, indicating that demand of high-end chips has been surging and that also benefitted the chipmaker.

Most of Qualcomm’s revenue comes from licensing its technologies that allow phones to connect to wireless data networks, and in the second quarter that licensing business generated revenue of $1.07 billion for the company while analysts, as per FactSet,   were in estimates of $1.01 billion for the same.

In the quarter ended March 29, company’s total revenue grew nearly 5% to post $5.22 billion which came above the analysts’ estimates of $5.03 billion.

Qualcomm’s excluding items earning of 88 cent per share also beat Wall Street analysts who were expecting it to be 78 cents per share.

Coronavirus outbreak has created a near-term insecurity in demand and supply of smartphone in markets around the world, but Qualcomm is expected to be deriving benefit from the long-term 5G efforts with recovery of its earning likely to be happening next year, said analysts at Canacord Genuity.