Qualcomm's quarterly revenue growth dwindles, shares fall

Wed Apr 23, 2014 5:52pm EDT
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By Noel Randewich

SAN FRANCISCO (Reuters) - Qualcomm Inc (QCOM.O: Quote) on Wednesday posted its smallest quarterly revenue increase since 2010 as it wrestles with a smartphone market that is losing steam and shifting to China, sending its shares lower.

With expansion in the smartphone industry moving away from wealthy markets such as the United States and toward China and other developing countries, where consumers favor less expensive devices, Qualcomm's once-impressive revenue growth is tapering off and it is focusing on costs to preserve its profitability.

The chipmaker reported fiscal second-quarter revenue of $6.37 billion, up 4 percent from the year-ago period. Analysts on average had expected $6.479 billion, according to Thomson Reuters I/B/E/S.

That was the smallest year-over-year percentage increase since the June quarter of 2010 when revenue shrank by 2 percent. It was far lower than the quarterly growth rates of over 20 percent that Qualcomm investors until recently have been accustomed to.

Less growth than expected in recent months in China, where China Mobile is preparing to launch a new, faster network with 4G, or LTE, technology, hurt Qualcomm's results in the quarter, Chief Executive Steve Mollenkopf told Reuters.

"We think that what's happening there is that is in anticipation of the launch of LTE," Mollenkopf said.

He said he expects improvements later in fiscal 2014 as China Mobile, the world's largest cellphone carrier, rolls out its new 4G network.

"The hope is the China lift will drive their recovery," said Bernstein analyst Stacy Rasgon. "But anytime you have semiconductor companies looking for a back-half recovery it makes people nervous."   Continued...

A Qualcomm sign is seen at one of Qualcomm's numerous buildings located on its San Diego Campus February 7, 2011. REUTERS/Mike Blake