Nearly lost in the generally positive hubbub over an agreement between Qualcomm Inc. and Nokia Corp., was the former’s actual earnings in fiscal third quarter and outlook for the rest of the year.
Tepid guidance from Qualcomm, on the heels of a disappointing outlook from Texas Instruments Inc., was yet another metric pointing at an overall slowdown in the market, at least one analyst said.
“The Qualcomm guidance is bad news for the industry,” said analyst Tero Kuittinen at Global Crown Capital L.L.C. “We have not had a guidance combo this soft from the two leading phone chip vendors for years, possibly since the turmoil of 2002.”
“It looks like over the past two months or so, phone chip demand may have started weakening substantially,” Kuittinen added. “This comes at the worst possible time for Motorola, which is grappling with a devastating product drought.”
The analyst said that with handset shipment growth in the first half of the year up about 14% compared to the same period last year, a tepid second half of the year – say, 8% growth – could result in an overall, annual handset shipment growth rate of 10%. But that scenario reflects a slowdown due in the current and fourth calendar quarters.
Qualcomm said it had earned revenue of $2.8 billion in the fiscal third quarter, up 19% from the year-ago quarter, and that net income reached $748 million, down 6% from the year-ago quarter and down 2% sequentially.
The company later issued its fiscal fourth-quarter and fiscal year outlook, for the quarter and year ending Sept. 28.
Fiscal fourth-quarter revenue would likely drop sequentially to $2.5 billion to $2.7 billion, based on shipments of about 84 million to 87 million MSM chipsets during the quarter, up from the approximately 68 million chips shipped in the year-ago quarter. For the fiscal 2008 year, Qualcomm forecast revenue of about $10.3 billion to $10.5 billion.
The company said it was still working through the financial implications of its new agreement with Nokia.
TI revs, net income down
Texas Instruments reported that revenue of $3.4 billion was down 2% from the year-ago quarter and that income of $588 million was down 4% from the year-ago quarter. While revenue was up 2% sequentially, income was down 11% sequentially. The company forecast third-quarter revenue in the range of $3.26 billion to $3.54 billion, likely flat or down sequentially.
TI’s report last Monday sent its stock down sharply as the market opened Tuesday. By week’s end the stock hovered around $23 to $24, near its 52-week low.
In contrast, Qualcomm’s stock bucked the sector and, apparently lifted by news that Qualcomm had reached an agreement with Nokia ending litigation between the two companies, floated well above $50.82, its 52-week high.
