QUALCOMM Earnings, Groundhog Day (QCOM)

QUALCOMM Inc. (NASDAQ: QCOM) is back to getting a cold shower after earnings.  If this feels familiar, it is because the same happened last quarter.  The CDMA chipset maker posted earnings of $0.59 EPS on an 8% revenue gain to $2.66 billion vs. Thomson Reuters estimates of $0.57 EPS and $2.63 billion in revenues.  It is the guidance and metrics that are again causing investors to sell the news.

Guidance for Q3 is $0.51 to $0.55 EPS on revenues of $2.5 to $2.7 billion versus estimates of $0.55 EPS and $2.66 billion from Thomson Reuters.  For Fiscal-2010, it sees $2.21 to $2.32 EPS and $10.4 to $11.0 billion in revenue versus Thomson Reuters figures of $2.31 EPS and $10.77 billion in revenues.

The company also raised its expected fiscal year CDMA ASP (avg. selling price) to a range of $182 to $188, above $179 previously offered.  The company saw healthy 3G device shipments and above the expected demand for chipsets.

Interestingly enough as far as where computing and communication is headed…. 3G footprint subscribers have now passed the 1 billion mark.  With the 3G auction process already having begun in India, QUALCOMM expects that 3G footprint to get even larger.

Calendar year 2010 3G device shipments are in line so far with its expectations, but the company is maintaining that it still is operating in and competing in a very competitive pricing environment for 3G chipsets.  It still expects to continue growing market share, via new partnerships and its existing relationships.

After the close, QUALCOMM shares are down over 7% at $39.60.  The 52-week range is $35.46 to $49.80. The day the company reported earnings in January the stock was trading at $46.99, but after that report the stock fell to close the next day down at $40.30 on more than 130 million shares.  More of the same, just a less-bad reaction.

Sometimes good and solid is not enough.  Selling the news is common, but this feels like one of those negative feedback loops.  Or maybe more like Groundhog Day.

JON C. OGG