Qualcomm Gives Downbeat Forecast as Phone Market Deteriorates; China Lockdowns To Blame
Qualcomm Inc., the biggest maker of smartphone processors, tumbled in late trading after giving a far weaker forecast than expected, punished by the economic slowdown and Covid-19 lockdowns in China.
Revenue will be $9.2 billion to $10 billion in the fiscal first quarter, Qualcomm said Wednesday. That compares with an average analyst estimate of $12 billion. Excluding certain items, earnings will $2.45 a share at best, Qualcomm said. The average projection was $3.40.
The outlook suggests that the slumping market for consumer devices is eroding even faster than expected, sending Qualcomm shares plunging as much as 8.4%. Even before the report, the stock was down 38% this year, hurt by concerns that smartphone demand was on shaky ground.
“The further deterioration of the macroeconomic environment and sustained Covid restrictions in China have led to broad-based demand weakening across tiers and regions,” the San Diego-based company said in a presentation to investors.
Chief Executive Officer Cristiano Amon has said that his tenure will be defined by how successful he is in pushing the chipmaker's technology into new areas, including automotive equipment, networking and computers. While Qualcomm is getting more revenue from those newer efforts, the bulk of its sales still comes from phones, limiting the company's overall growth.
Qualcomm's main product is the processor that runs many of the world's smartphones. It also sells the modem chips that connect Apple Inc.'s iPhone to high-speed data networks.
Three months ago, Qualcomm slashed its projection for smartphone shipments, predicting a decline in the mid-single-digit percentage range in 2022 from the prior year. Phone makers have been working through excess
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