QCOM QUALCOMM Inc

By Maria Armental and Asa Fitch 

Wireless chip maker Qualcomm Inc. reported a nearly 5% revenue increase in the March quarter, as the chip business offset a slight revenue decline in its licensing arm.

The San Diego-based company shipped 129 million chips in the quarter, a roughly 17% decline from the previous quarter but within its guidance of 125 million to 145 million.

The mobile-chip giant warned in February that while it projected fewer chip shipments in the quarter, it expected the money it made per chip "to be meaningfully higher," driven by launches of fifth-generation, or 5G, wireless technology devices.

On Wednesday, Qualcomm said the coronavirus pandemic led to a roughly 21% decline in handset demand compared with its projections and cut its guidance for the current quarter by about 30%, projecting 125 million to 145 million in chip shipments.

Overall, Qualcomm reported a second-quarter profit of $468 million, or 41 cents a share. On an adjusted basis, profit rose to 88 cents a share from 77 cents a share a year earlier.

Meanwhile, revenue rose to $5.22 billion from $4.98 billion a year earlier.

The results beat Wall Street expectations for adjusted profit and revenue, according to FactSet.

This quarter, Qualcomm expects 29 cents to 49 cents a share in profit, or 60 cents to 80 cents a share on an adjusted basis, and $4.4 billion to $5.2 billion in revenue. Analysts expect 57 cents a share, or 78 cents a share as adjusted, on $4.89 billion in revenue.

Qualcomm Chief Executive Steve Mollenkopf said the 5G road map remained intact, even if some handset makers might change the timing of handset launches due to the pandemic and the resulting drop in demand. The company was keeping its 2020 estimate of 5G global handset shipments unchanged, he said.

Last year, the company projected between 175 million and 225 million units.

The recovery in China after the virus subsided there, he added, could indicate how demand returns in other countries.

"China had a pretty deep dip and is really well along the way to recovery now," he said. "You can apply a similar type of model basis to the rest of the world."

Qualcomm said it reached new patent licensing agreements with Chinese handset makers Oppo and Vivo, effective April 1 following delays in payments from them under prior agreements as negotiations for new deals progressed. There was no change in a long-running license-fee dispute with Chinese telecom giant Huawei Technologies Co., from which the company said it hadn't received any revenues in the six months through March 29, the end of the second quarter. Negotiations toward a licensing agreement are continuing, however.

Shares, which in January traded near $100 record levels, closed Wednesday at $78.97 and rose 2% to $80.79 in after-hours trading.

Write to Maria Armental at maria.armental@wsj.com and Asa Fitch at asa.fitch@wsj.com

(END) Dow Jones Newswires

April 29, 2020 18:09 ET (22:09 GMT)

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