Can Qualcomm Ever Get Its Guidance Right?

Qualcomm Inc. (NASDAQ: QCOM) reported its fiscal second-quarter earnings on Wednesday after the markets closed. The mobile chip giant had $1.40 in earnings per share (EPS) on $6.9 billion in revenue, versus Thomson Reuters consensus estimates of $1.33 in EPS on $6.83 billion in revenue. The same period from the previous year had $1.31 in EPS on $6.37 billion in revenue.

As a reminder, Qualcomm had previously ratcheted its guidance lower. Unfortunately, that is the case with this report again.

In the fiscal third quarter, Qualcomm expects to have $0.85 to $1.00 in EPS on $5.4 billion to $6.2 billion in revenues, while having 210 million to 230 million MSM chip shipments. There are consensus estimates of $1.14 in EPS on $6.5 billion in revenue. This also stacks up against $1.44 EPS a year earlier, on revenue of $6.8 billion, and on MSM chip shipments of 225 million.

The guidance for the 2015 fiscal year is EPS in a range of $4.60 to $5.00 EPS, versus a prior range of $4.85 to $5.05. Its 2015 revenues are now put in a range of $25 billion to $27 billion, down from a prior range of $26.3 billion to $28 billion. The new guidance compares to consensus estimates of $5.00 in EPS and $27.22 billion in revenue.

ALSO READ: What ARM and Rambus Have in Common

Also looking ahead, Qualcomm reduced its outlook for the semiconductor business, QCT, for the second half of the 2015 fiscal year primarily due to:

• The increased impact of customer share shifts within the premium tier, which will reduce the company’s sales of its integrated Snapdragon processors and skew the product mix towards modem chipsets
• A decline in Qualcomm’s share at a large customer

During the second quarter of fiscal 2015, Qualcomm returned $2.6 billion to shareholders, including $1.9 billion through repurchases of 27.8 million shares of common stock and $689 million in cash dividends paid.

In early March, the company announced a new $15 billion stock repurchase program, which includes the intention to repurchase $10 billion of common stock within 12 months.

Steve Mollenkopf, CEO of Qualcomm, said:

We are pleased with our second quarter results, with record licensing revenues and earnings driven by all-time high 3G/4G device shipments reported by our licensees. We continue to see robust global demand for 3G/4G devices, including in China where our licensing business is now better positioned to participate in the rapidly accelerating adoption of our 3G/4G technology. While we remain confident in the significant growth opportunities ahead, we are reducing our QCT outlook for fiscal 2015, primarily due to the increased impact of customer share shifts within the premium tier and a decline in our share at a large customer. In addition to our ongoing expense management initiatives, we have initiated a comprehensive review of our cost structure to identify opportunities to improve operating margins while at the same time extending our technology and product leadership positions.

Cash, cash equivalents and marketable securities totaled $29.6 billion at the end of the fiscal second quarter, compared to $32.1 billion in the same period last year.

Maybe the activist efforts can gain more steam ahead. Maybe.

ALSO READ: Lam Research Poised for Much More Growth, Even After Earnings Pop

Shares of Qualcomm closed Wednesday up 0.5% at $68.94. Following the release of the earnings report, shares were down 2.5% at $67.22 in after-hours trading. The stock has a consensus analyst price target of $76.50 and a 52-week trading range of $62.26 to $81.97.