Qualcomm posts ‘exceptional’ Q4, rides 5G wave

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Qualcomm's earnings per share in the quarter represented an 86% increase compared with the year-ago quarter.

Qualcomm shares rose after the market closed on Wednesday, shooting up more than 14% at one point to $147.21, as investors reacted to good news in its fiscal fourth-quarter earnings.

The company’s earnings for its fourth quarter beat expectations, at $1.45 per share versus the average estimate by analysts of $1.17 per share. Net income was up 76% compared with the same quarter a year ago. The company reported fourth quarter revenue of $6.5 billion.

“Our fiscal fourth quarter results demonstrate that our investments in 5G are coming to fruition and showing benefits in our licensing and product businesses,” said Qualcomm CEO Steve Mollenkopf in a statement. “We concluded the year with exceptional fourth quarter results and are well positioned for growth in 2021 and beyond. As the pace of disruption in wireless technology accelerates, we will continue to drive growth and scale across our RF front-end, automotive and IoT adjacencies.”

The pandemic has highlighted the importance of Qualcomm’s technology and products, Mollenkopf said during the company’s earnings conference call.

Increased demand for connected devices in the work-from-home environment drove revenues. And while Qualcomm’s chip business is benefiting from the uptick in 5G handsets, the company is prepared to take advantage of 5G and its impact on many industries.

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The record earnings per share in the quarter represented an 86% increase compared with the year-ago quarter.

“It’s worth noting that our Q4 QCT revenue, a near record, included only a partial quarter impact from a large U.S. OEM customer,” Mollenkopf said. “This strong result demonstrates the breadth of our customer traction.”

Several years ago, the company identified RF as a unique transition opportunity to address many of the technical challenges of delivering a 5G experience. In fiscal 2020, the company delivered $2.4 billion in RF front-end revenue, up 60% year over year.

According to Qualcomm, RF Front End (RFFE) refers to a set of mobile device components that converts information into radio signals that can be transmitted and received over the air. Qualcomm Technologies develops a suite of RFFE products, wraps modem intelligence around them, and delivers mobile solutions that support advanced 5G multimode capabilities.

It’s also extending its RF front-end expertise into automotive. “The automotive industry is transforming at an unprecedented rate, and we are incredibly well-positioned to lead the industry with a long-term opportunity” to expand share, Mollenkopf said.

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Asked how much millimeter wave has impacted the front-end business, “you should not really think of our revenue being driven by millimeter wave,” said CFO Akash Palkhiwala. “We have a broad portfolio of technologies – 4G, 5G sub-6 and 5G millimeter wave and our design traction reflects the strength of our portfolio. So it’s really across all those technologies.”

Qualcomm President Cristiano Amon said they’re excited about how broad the front-end business is today. As for millimeter wave, that’s been a requirement for markets like the United States. DoCoMo in Japan launched millimeter wave services in September, and it’s tracking to launch in Korea.

There are now 130 operators globally investing in millimeter wave, and device price points are becoming “very reasonable,” he said. Apple’s new line up of iPhone 12 devices all support millimeter wave frequencies in the U.S. and use Qualcomm chips.