Qualcomm shares fall on Q1 forecast, hiring freeze announced

Qualcomm Shares fell 7% in extended trading on Wednesday after the chipmaker reported fourth-quarter earnings online but offered poor first-quarter guidance.

Qualcomm also said it implemented a hiring freeze at the start of the current quarter.

Here’s how the company did it:

• Earnings: $3.13 per share, adjusted, versus $3.13 per share as expected by analysts, according to Refinitiv.
• Revenue: $11.39 billion adjusted, versus $11.37 billion as expected by analysts, according to Refinitiv.

Overall revenue increased 22% year-over-year in the quarter that ended September 25, according to a statement.

As for guidance, Qualcomm called for adjusted earnings of $2.25 to $2.45 per share for the fiscal first quarter on revenue of $9.2 billion to $10 billion. Analysts polled by Refinitiv had expected earnings per share of $3.42 and revenue of $12.02 billion.

“Given the uncertainty caused by the macroeconomic environment, we are updating our forecast for calendar year 2022 3G/4G/5G handset volumes from a single-digit percentage decline. year-over-year to a low double-digit percentage decline,” Qualcomm said in the report.

“Rapidly deteriorating demand and easing supply constraints in the semiconductor industry have led to increased channel inventories.”

Revenue for Qualcomm CDMA Technologies, or the QCT category, which includes smartphone chips, radio frequency front-end components, automotive chips and Internet of Things devices, totaled $9.9 billion. That was up 28%, and that’s more than the consensus of $9.87 billion among analysts polled by StreetAccount.

Within the QCT segment, mobile handset revenue was $6.57 billion, up 40% and a hair below the StreetAccount consensus of $6.59 billion. Automotive chips rose 58% year-on-year to $427 million. Qualcomm’s IoT business, which makes low-power chips for connected devices, rose 24% to $1.92 billion. RF front-end chips fell 20% to $992 million.

Qualcomm Technology Licensing, or QTL, Qualcomm’s other major unit that includes licensing fees related to 5G and other technologies manufactured by the company, generated $1.44 billion in revenue, up 8% but lower than the StreetAccount consensus of $1.58 billion.

In a call with investors on Wednesday, CEO Cristiano Amon said the semiconductor industry faces macroeconomic headwinds “from which we are not immune.” He added that the company had already implemented a hiring freeze and was prepared to cut operating expenses further if necessary.

“We are in a strong position to handle short-term headwinds,” Amon said.

A spokesperson told CNBC that the hiring freeze was put in place at the start of fiscal year 2023.

During the quarter, Qualcomm said it had extended a patent licensing agreement with Samsung through 2030. And Arm, which supplies the chip architectures used by Qualcomm, filed suit against Qualcomm for breach of license agreements and trademark infringement.

Despite the after-hours move, Qualcomm shares are down 37% so far this year, while the broader S&P 500 index is down 20% over the same period.

Executives will discuss the results with analysts on a conference call beginning at 4:45 p.m. ET.

This is breaking news. Please check for updates.

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Correction: Updated to reflect Qualcomm reported $6.57 billion in handset revenue. An earlier version rounded up to $6.6 billion.