Qualcomm's first-quarter earnings report: net profit fell 24% year-on-year

On January 28th, Beijing time, Qualcomm announced its first-quarter results for fiscal year 2016. The report revealed a net profit of $1.5 billion, marking a 24% decline from the same period last year. Revenue also dropped to $5.8 billion, down 19% compared to the previous year. While the quarterly results surpassed analyst expectations, the company's outlook for the second quarter fell short, leading to a slight dip in its stock price. For the quarter ending December 27, Qualcomm’s net profit stood at $1.5 billion, down 24% from $2 billion in the same period last year and 41% from the previous quarter. Diluted earnings per share reached $0.99, a 15% drop from $1.17 in the prior year but up 48% from $0.67 in the previous quarter. Operating profit for the quarter was $1.7 billion, down 18% year-over-year but up 48% from the previous quarter. Excluding one-time items, net profit was $1.5 billion, down 35% from $2.3 billion in the same period last year. Earnings per share were $0.97, down 28% from $1.34 in the same period last year but up 7% from $0.91 in the previous quarter. Analysts had expected $0.90 per share, so the result exceeded expectations. Revenue for the quarter was $5.8 billion, a 19% decrease from $7.1 billion in the same period last year and 6% lower than the previous quarter. Despite the drop, it still outperformed analysts' expectations of $5.99 billion. Equipment and services revenue totaled $4.087 billion, down from $5.216 billion in the same period last year. License revenue came in at $1.688 billion, down from $1.883 billion in the same period last year. Total operating costs and expenses were $4.09 billion, down from $5.035 billion in the same period last year. Equipment and service cost of revenue was $2.534 billion, down from $3.047 billion in the same period last year. R&D expenses remained flat at $1.352 billion, while sales, general, and administrative expenses decreased to $576 million from $583 million. Other income rose to $374 million, compared to $53 million in the same period last year. The CDMA Technology Group reported revenue of $4.096 billion, down 23% year-over-year but up 13% from the previous quarter. Pre-tax profit was $590 million, down 49% year-over-year but up 111% from the previous quarter. The Technology Licensing Group saw revenue of $1.607 billion, down 12% year-over-year and 10% from the previous quarter. Pre-tax profit was $1.339 billion, down 15% year-over-year and 10% lower than the previous quarter. Non-GAAP revenues were $63 million, up 54% from the previous year and 50% from the previous quarter. However, the pre-tax loss was $150 million. Operating cash flow for the quarter was $2.7 billion, up 16% from $2.4 billion in the same period last year and 63% from $1.7 billion in the previous quarter. As of December 28, 2015, Qualcomm held $30.6 billion in cash, cash equivalents, and marketable securities, slightly down from $31.6 billion in the previous quarter. Qualcomm expects second-quarter revenue for FY2016 to range between $4.9 billion and $5.7 billion, a 17% to 29% year-over-year decline. The midpoint of $5.3 billion was below analyst expectations of $5.69 billion. Earnings per share are expected to be between $0.69 and $0.79, up 10% to 25% from the same period last year. Excluding one-time items, EPS is expected to be between $0.90 and $1.00, down 29% to 36% year-over-year, falling short of the $1.02 analysts expected. On the same day, Qualcomm's shares closed at $47.53, down 2.04%. In after-hours trading, the stock fell further to $47.50. Over the past 52 weeks, Qualcomm's stock has ranged between $44.39 and $74.09.

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