- Qualcomm shares fell over 14%, marking its largest drop since 2020
- Handset division revenue declined 26% to $5.14 billion this quarter
- Total chip segment revenue dropped 8% to $9.02 billion
Shares of Qualcomm tumbled more than 14%, putting the chipmaker on track for its steepest single-day decline since 2020.
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Quarterly revenue from the chipmaker's handset division, its largest business, fell 26% to $5.14 billion, dragging total chip segment revenue down 8% to $9.02 billion. The company lost close to $1.8 billion in sales missing StreetAccount's estimate of $5.21 billion. Adjusted earnings per share declined 28% to $2.17, while adjusted pre-tax profit reduced 30%. Total adjusted revenue fell 7% to $10.44 billion.
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Revenue from Qualcomm's chip division fell 8% to $9.02 billion, while its pre-tax margin narrowed to 24% from 29% a year earlier. For the current quarter, the company has guided for a margin of 20% to 22%. Qualcomm said roughly three percentage points of the decline reflects the inclusion of its data centre business within the chip segment, as the unit continues to incur significant investment costs ahead of an anticipated ramp-up in revenue.
The company will also be raising prices on it products ciiting rising input costs.
The chip manufacturer is dealing with ramping memory costs spurred by increased demand from data centres and declining smartphone sales. Qualcomm's chief executive officer Cristiano Amon told Reuters.
Amon stated that the demand for smartphones running on the Android operating system led to sequential improvement, with the firm making substantial headway in scaling the business beyond mobile headsets.
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Qualcomm's growth outlook is supported by its expansion into data centre and automotive chips. However, brokerages cited by Reuters stated the stronger visibility has yet to translate into near-term earnings growth as the tapering of revenue from Apple and higher input costs continue to weigh on performance.
Shares of Qualcomm were trading 9.64% lower to $156.49 at 8:37 p.m. IST.
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