April 27 (Reuters) – Qualcomm Inc (QCOM.O) forecast third-quarter revenue above analysts’ expectations after beating second-quarter revenue and profit estimates on Wednesday, largely due to its move to focus on a growing non-phone business to cushion a potential blow. of the slowdown in demand for smartphones.
The strong earnings outlook and record quarterly revenue for the latest quarter immediately propelled Qualcomm shares up about 5% in after-hours trading.
Lockdowns in China, the war in Ukraine and rising inflation have hit consumers hard, keeping them from spending on electronics like phones. However, Qualcomm remained shielded from this as the premium smartphone market, where Qualcomm is the leader, was not as affected by slowing demand as lower-priced phones, CEO Cristiano Amon told Reuters. .
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To reduce its reliance on phones, Qualcomm has been diversifying its revenue streams by serving other markets, including auto, and that strategy has been successful so far, Amon said.
The increased adoption of 5G and cloud-based applications has helped Qualcomm, which makes chips that allow devices to connect to mobile data networks as well as wireless networks. Qualcomm also released the latest version of its flagship Snapdragon chip brand during the second quarter.
Chip revenue for automotive and internet devices rose 41% and 61%, respectively, during the second quarter, while revenue from its core mobile phone business rose 56%, thanks to the new Snapdragon launch.
In addition, Qualcomm is weighing the impact of winding down business with Apple (AAPL.O) by taking advantage of the gap left by Huawei in China’s smartphone market by meeting the chip needs of Chinese brands like Oppo, Vivo and Xiaomi. , especially for high-end equipment. end phones.
The company forecast revenue for the current quarter in the range of $10.5 billion to $11.3 billion, compared with analyst estimates of $9.98 billion, according to IBES data from Refinitiv.
Adjusted revenue for the quarter ended March 27 was $11.16 billion, above estimates of $10.6 billion.
Excluding items, Qualcomm earned $3.21 per share, beating estimates of $2.91 per share.
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Reporting from Chavi Mehta in Bengaluru and Jane Lanhee Lee in Oakland, California; Edited by Bernard Orr
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