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In an optimistic turn, San Diego’s chip designer Qualcomm projected first-quarter sales and profits above Wall Street expectations. The company foresees a surge in revenue and profit margins, especially as the smartphone sales decline, notably in China, shows signs of easing. Additionally, an updated contract with Apple contributes to the company’s positive forecast.

The tech giant predicted first-quarter revenue between $9.1 billion and $9.9 billion, surpassing analysts’ projections of $9.2 billion, based on LSEG data. Expectations for adjusted profits were placed at $2.25 to $2.45 per share for the current quarter, outstripping the anticipated $2.23 per share, as per LSEG.

Following the release of these projections, Qualcomm’s shares climbed by 3.4%, indicating investor enthusiasm about the company’s future.

During a conference call, Qualcomm’s Chief Executive Cristiano Amon conveyed that smartphone companies had successfully managed existing inventory and were now initiating new orders.

The recently concluded fiscal fourth quarter showcased Qualcomm’s robust performance, with reported sales reaching $8.67 billion and adjusted profits at $2.02 per share. These figures exceeded analysts’ estimates of $8.51 billion in sales and $1.91 per share, as per LSEG data.

Despite its ongoing success, Qualcomm faces fresh competition from Huawei Technologies, which has resumed manufacturing its own smartphone chips, diminishing its reliance on Qualcomm after several years of partnership.