Qualcomm sees lower earnings outlook for the year ahead

The predictions warn of a challenging year for the company after rumors imply that Samsung will no longer be a customer for its major phones

The analysts’ expectations had been going quite against the San Diego chipmaker Qualcomm but the company was able to beat out those fears. However, this doesn’t entirely put the company out of danger as uncertainly in the future is looming strong over its head as well as its shares.

The chipmaker was able to beat the revenue estimates for the quarter with $7.1 billion which is an increase of 7 percent from the same quarter last year. Analysts had predicted the revenue to hit a $6.94 billion mark. As far as the earnings per share go, they also went up consequently and hit $1.34, increasing by 6 percent from last year’s quarter and also well above the analysts’ prediction of $1.25.

This sketches a pretty good image of the company at the moment but just as we mentioned earlier, the company needs to gear up for the future troubles. The earnings outlook is a cause of concern because it has dropped and according to the company estimates, the fiscal year 2015 revenue is going to hit somewhere between $26 billion and $28 billion. This is a substantial decrease from previous estimates which were between $26.8 billion and $28.8 billion.

In the aftermath of all this, the company’s stock has fallen more than 7 percent in after-hours trading. One of the major reasons why the company was forced into decreasing its outlook was the immense competition in China along with the expectation that its latest Snapdragon 810 chip is not going to make it to so many phones this year. The phones which the company is most likely fearing to lose are the new ones by Samsung, particularly the Galaxy S.

The press release statement by Qualcomm stated the reason for lower outlook saying that this was the result of “expectations that our Snapdragon 810 processor will not be in the upcoming design cycle of a large customer’s flagship device.”

The company is looking for ways to shield itself against the possible outcomes which will result from Samsung’s highly rumored decision to not equip its Galaxy smartphones with Qualcomm’s Snapdragon 810 chip due to alleged overheating.

“[The Snapdragon 810] is working as we expect it to work,” said Steve Mollenkopf, CEO of Qualcomm, in the earnings call. “We’re pleased how it’s performing. There is concern really related to one OEM.”

Disputes in China over licensing agreements with the Chinese customers are also a great cause of concern. Qualcomm wrote in a statement that “China continues to present significant opportunities for us, particularly with the rollout of 3G/4G LTE multimode, but also presents significant challenges, as our business practices continue to be the subject of an investigation by the China National Development and Reform Commission.”

source: qualcomm