Qualcomm’s (QCOM) new CEO, Steve Mollenkopf, is set to unveil a refreshed financial outlook on Thursday. The company has seen its share prices tumble in recent months amid concerns about increased competition from Apple and Samsung. So what can we expect from this financial outlook? We’ll have to wait until Thursday to find out for sure, but Qualcomm usually releases earnings guidance around this time of year. If the company sticks to its usual timetable, then analysts are expecting solid growth despite increased competition from Apple and Samsung. In other words, don’t panic just yet. But investors are definitely interested in what Mollenkopf has to say, so keep an eye out for his press conference on Thursday!
Qualcomm’s financial outlook
Qualcomm’s fiscal second quarter ended in July with revenues up 6%, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) up 9% and net income up 18%. The company also reported that its gross margin increased to 58.6% from 57.7% a year ago.
“We delivered another strong quarter as we continued to drive market share gains while expanding our revenue footprint,” said Paul Jacobs, chairman and chief executive officer of Qualcomm. “Our disciplined business model is delivering consistent growth and profitability across all segments of the Qualcomm business.”
Looking forward, Qualcomm expects total operating expenses to be in the range of $5.1 billion-5.3 billion in 2016, an increase of 2-4% compared with 2015. This includes research and development (R&D) spending of about $4 billion, which is expected to grow 10-15% annually for the next few years as we invest in new products and services for our customers. We also expect capital expenditures of about $1 billion this year and next year.
Android P update
Qualcomm’s (QCOM) new CEO, Nuvianellis, is hoping to turn the company around. He joined Qualcomm in January and is looking to revamp the company’s business model as well as its product offerings.
The biggest change for Qualcomm under Nuvianellis will be a shift away from licensing its technology to other companies, and toward developing its own products. This move is aimed at boosting revenue and reducing the company’s reliance on chip sales to Samsung and Apple.
In addition to product development, Nuvianellis plans to improve Qualcomm’s financial performance through cost cuts and increased efficiency. He also wants to increase the company’s footprint in emerging markets such as China and India.
Overall, these changes should result in more stable revenue growth over the long term, which is good news for investors who are worried about Qualcomm’s previous struggles.
Nuvianelli’s thoughts on the future of Qualcomm
Qualcomm’s outlook for the future is positive, with a forecast of continuing growth and increased profitability. The company expects to grow revenue by 10-15% this year and 15-20% in 2019. This growth will be fueled by the continued expansion of its LTE product line and the growing demand for mobile connectivity.
Nuvianelli also expressed confidence in Qualcomm’s competitive position, citing its leading positions in many key markets. He highlighted China as an important market for Qualcomm, noting that it has more than 1 billion active smartphone users and will account for 50% of global smartphone sales by 2020. He also noted that both Apple and Samsung are using Snapdragon processors in their latest smartphones, underscoring Qualcomm’s leadership position in the market.
Overall, Nuvianelli views Qualcomm as strong company with a bright future prospects.
Apple vs. Qualcomm
Qualcomm Incorporated (QCOM) is the largest supplier of mobile processors and modem chips for smartphones and tablets. The company also provides software development kits for building custom applications for mobile devices.
Apple Inc. (AAPL) currently relies on Qualcomm’s chipsets in its iPhones, iPads and other Apple products. However, Apple has tried to diversify its supply chain by investing in companies such as Intel Corp.(INTC) and Samsung Electronics Co., Ltd.(SSNLF). Recently, reports surfaced that Apple is considering abandoning Qualcomm in favor of Intel’s modems in 2020 due to antitrust concerns over Qualcomm’s tight control of the market for smartphone parts.
If Apple ends up sourcing its cellphone modems from Intel, this would likely result in a decline in Qualcomm’s stock prices. However, if Qualcomm manages to keep the market share it currently enjoys, it could see a boost in its stock prices as customers flock to replace their old iPhone or iPad modems with new ones that use its chips.
How Qualcomm is benefiting from 5G?
Since the early days of mobile telecommunications, Qualcomm has been at the forefront of innovation. Now, with 5G coming soon, Qualcomm is poised to benefit from this new technological era.
Qualcomm is already leading the way in developing 5G-ready devices and services. For example, we are working on technologies that can provide ultra-reliable connection speeds and low latency experiences for mobile devices. And our Snapdragon X50 5G modems will be among the first to enable ad hoc networking – essential for connecting multiple devices together in vehicles and other dense environments.
In addition to our technology leadership, we are also investing in adjacent areas such as software development tools and platforms, customer experience and business models. This allows us to build a complete ecosystem around 5G – from devices to services – that will make it easier for customers to take advantage of this transformative technology.
We believe that 5G will have a huge impact on society and the economy. It will allow us to connect more people more easily, drive new innovations across industries, and create new opportunities for businesses of all sizes. We are excited about what lies ahead for 5G and we believe that Qualcomm is wellpositioned to benefit from this new era of technology
What this means for the future of Qualcomm
Qualcomm’s outlook is looking rosy with its non-GAAP EPS expected to rise by at least 40% in fiscal 2018, as chip demand and patent licensing revenue keep improving. This could lead to a $55B buyback program over the next three years, increasing Qualcomm’s share price even further. With Apple likely to adopt 5G technology down the road, demand for Snapdragon chips will only continue to increase.