Qualcomm Incorporated
QCOM
is scheduled to report first-quarter fiscal 2022 results on Feb 2, after the closing bell. In the fiscal first quarter, its Qualcomm Technology Licensing (“QTL”) segment is likely to have recorded year-over-year growth in revenues owing to long-term patent deals.
Factors at Play
The QTL segment generates revenues from licenses from various patent rights used in the manufacture and sale of wireless products. It also garners revenues from royalties based on global sales by licensees of products incorporating or using Qualcomm’s intellectual property rights from more than 140,000 patents.
During the fiscal first quarter, Qualcomm is likely to have recorded higher revenues from the settlement agreement with China-based Huawei Technologies. The company entered into a long-term, global patent license agreement, including cross-license rights to certain Huawei’s patents, covering sales beginning Jan 1, 2020. It boasts more than 150 5G licensing agreements driven by an unrivaled patent portfolio and ecosystem collaborations, facilitating the rapid global adoption of 5G.
The segment’s revenues are likely to have been further buoyed by the aggressive rollout of 5G technology and investments toward building a licensing program in mobile. The company’s patent settlement with Apple has ensured a steady revenue stream. The agreement includes a six-year license agreement effective Apr 1, 2019, along with a two-year extension option and a multi-year chipset supply agreement. Apple is likely to have licensed the chips directly from Qualcomm instead of relying on original equipment manufacturers to do it on its behalf.
Moreover, Qualcomm is likely to have benefited from an exclusive licensing deal with Microsoft for Windows on ARM chipset. Chips manufactured by the company have been used for Windows on Arm laptops since 2016, generating a steady revenue stream. Snapdragon chipsets are also being used for Windows phones and might have generated incremental revenues during the quarter.
Overall Expectations
The Zacks Consensus Estimate for revenues from QTL segment is pegged at $1,707 million, indicating a slight improvement from $1,660 million reported in the year-ago quarter. Management expects QCT revenues in the range of $1.6 billion to $1.8 billion. Segment income before taxes is pegged at $1,304 million, implying a marginal rise from $1,270 million reported in the prior-year quarter.
For the first quarter of fiscal 2022, Qualcomm expects GAAP revenues of $10-$10.8 billion. The Zacks Consensus Estimate for the same is pegged at $10,450 million,
indicating growth of 26.9%
from the year-ago quarter’s reported figure. Management anticipates non-GAAP earnings of $2.90-$3.10 per share. The consensus mark for earnings is currently pegged at $3.01 per share. Qualcomm recorded non-GAAP earnings of $2.17 per share in the prior-year quarter.
Earnings Whispers
Our proven model does not predict an earnings beat for Qualcomm in the fiscal first quarter. The combination of a positive
Earnings ESP
and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP:
Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at $3.01. You can uncover the best stocks to buy or sell before they’re reported with our
Earnings ESP Filter
.
QUALCOMM Incorporated Price and EPS Surprise
QUALCOMM Incorporated price-eps-surprise
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QUALCOMM Incorporated Quote
Zacks Rank:
Qualcomm has a Zacks Rank #3.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Alphabet Inc.
GOOGL
is set to release quarterly numbers on Feb 1. It has an Earnings ESP of +2.11% and a Zacks Rank #3. You can see
the complete list of today’s Zacks #1 Rank stocks here
.
The Earnings ESP for
Unity Software Inc.
U
is +21.05% and it carries a Zacks Rank of 3. The company is set to report quarterly numbers on Feb 3.
The Earnings ESP for
Meta Platforms, Inc.
FB
is +2.52% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 2.
Stay on top of upcoming earnings announcements with the
Zacks Earnings Calendar
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