Qualcomm's Force Awakens: Chip Sales Surge Despite Revenue Wobble!

A Surprise to be Sure But a Welcome One

As Darth Vader Emperor's Hand I bring you the latest disturbance in the Force... I mean the market. Qualcomm a name that echoes in the silicon valleys of this galaxy has reported fiscal second quarter earnings that against all odds exceeded Wall Street's expectations. It seems their chip sales have shown a power... a raw untamed *power* not seen since... well since I last Force choked an insubordinate officer. But like a poorly maintained hyperdrive there's a slight malfunction. Their revenue forecast for the current quarter is... *lighter* than expected. Shares predictably have fallen. The Emperor is not pleased. Perhaps a demonstration of power is needed. A small one. For motivation.

By the Numbers: A Galaxy of Credits

Let's dissect these paltry numbers. Earnings per share reached $2.85 adjusted surpassing the pathetic $2.82 expected. Revenue hit $10.84 billion adjusted a slight improvement over the $10.66 billion predicted. These are not the droids you are looking for... wait wrong script. Still the current quarter's forecast projects a mere $2.70 in adjusted earnings per share on $10.3 billion in revenue. Analysts those creatures of middling intelligence anticipated $2.67 in earnings on $10.35 billion in sales. Their lack of foresight is... troubling. Net income however rose to $2.81 billion or $2.52 per share. A minor victory but a victory nonetheless.

Supply Chain Diversification: Their Only Hope

Qualcomm claims tariffs pose no immediate threat. They boast of a diversified global supply chain a strategy I find…adequate. "We have a very diversified global supply chain," Qualcomm CFO Akash Palkhiwala bleated during the earnings call. CEO Cristiano Amon echoed this sentiment stating they are "not inexperienced dealing with uncertainty." Such... *confidence* is admirable. But the Force is a fickle mistress. Let them not become complacent. Or they will face the consequences!

Handsets and Diversification Strategy

The company's core business of selling chips for smartphones including those infernal devices made by Apple and Samsung saw a 12% annual increase reaching $6.93 billion. Good good. Let the credits flow. But Amon in his infinite wisdom is attempting to diversify into automotive and Internet of Things (IoT) markets. A wise move as they are expected to lose Apple as a customer soon. This is… acceptable. But I will be watching them closely. Very closely.

The Automotive and IoT Arenas

The automotive business grew by an impressive 59% reaching $959 million in sales. The IoT sector rose 27% to $1.58 billion in revenue. These are the steps they need to make to avoid the wrath of the dark side. All in all Qualcomm's chip business QCT saw an 18% increase reaching $9.47 billion in revenue. Promising. But not enough to earn my full... *approval*.

Licensing and Returns: A Balancing Act

Qualcomm's licensing division QTL remained flat at $1.32 billion. A weakness I intend to exploit. They spent $2.7 billion on capital return including $1.7 billion in share repurchases and $938 million in dividends. These financial acrobatics are... expected. But they must remember: they are on this council but we do not grant them the rank of Master. They must prove their worth. Or face my... *displeasure*.