Qualcomm Inc. (QCOM) reported solid financial results for the third quarter of fiscal 2013, beating the Zacks Consensus Estimate. Management has raised its outlook for fiscal 2013. As a result, in the after market trade on NASDAQ, the stock price of the company was up $2.49 (4.06%) to $63.88. Qualcomm currently has a Zacks Rank #3 (Hold).
Qualcomm is facing competitive threat from its closest rival, Intel Corp. (INTC), which has been redesigning its chipsets for the mobile computing market. Competition is also likely to emanate from formidable rivals like Broadcom Corp. (BRCM) and NVIDIA Corp. (NVDA). Despite this, the company is maintaining its strong performance on the back of innovative high-end chipsets and a broad global customer base.
Quarterly total revenue of $6,243 million was up 35% year over year, surpassing the Zacks Consensus Estimate of $6,030 million. Segment wise, Qualcomm CDMA Technologies businesses contributed $4,222 million of revenues in the third quarter, up 47% over the prior-year quarter. Quarterly EBT margin was 17%. Qualcomm Technology Licensing generated $1,867 million in revenues, up 17% year over year. Quarterly EBT margin was 87%. Qualcomm Wireless & Internet segment generated $158 million, down 1% year over year and its operating loss was $16 million.
On a GAAP basis, quarterly net income from continuing operations was $1,580 million or 90 cents per share compared with $1,203 million or 69 cents in the year-ago quarter. In the third quarter of fiscal 2013, adjusted (excluding special items) earnings per share came in at 92 cents, a penny higher than the Zacks Consensus Estimate.
During the third quarter of fiscal 2013, Qualcomm shipped approximately 172 million CDMA-based MSM chipsets, up 22% year over year. This figure was far better than the company’s guidance of a mid-point of 168 million. Average selling price of a mobile handset with an in-built Qualcomm chipset during this quarter was $227-$233.
Quarterly operating income was $1,677 million compared with $1,382 million in the year-ago quarter. Gross margin was 60% compared with 62.8% in the year-ago quarter. Quarterly operating margin was 26.9% compared with 29.9% in the prior-year quarter. In the reported quarter, the company returned $604 million (35 cents per share) to its shareholders in the form of cash dividends and another $1.04 billion through buyback of 16.7 million shares of common stock.
During the third quarter of fiscal 2013, Qualcomm generated $2,077 million of cash from operations compared with $922 million in the prior-year quarter. Free cash flow, in the reported quarter, was $1,763 million compared with $523 million in the year-ago quarter.
At the end of the third quarter of fiscal 2013, Qualcomm had $30,402 million versus $26,837 million at the end of fiscal 2012. The company has no outstanding debt.
Fourth Quarter of Fiscal 2013 Financial Guidance
The fourth-quarter revenues will likely be within the range of $5.9 billion - $6.6 billion. Non-GAAP earnings per share will be $1.02 - $1.10. GAAP earnings per share will be within the range of 86 cents - 94 cents. Qualcomm is expected to ship 171 million - 181 million MSM chipsets in the fourth quarter of fiscal 2013.
Full Fiscal 2013 Financial Guidance
The fiscal 2013 revenues will be within the range of $24.3 billion - $25 billion. Non-GAAP earnings per share will be within the range of $4.48 - $4.56. GAAP earnings per share is expected in the range of $3.90 - $3.98. ASP of mobile handset with an in-built Qualcomm chipset during fiscal 2013 will be around $223 - $229.
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