$Qualcomm(QCOM.US) Earnings Prep Notes:
Bottom line is that Qualcomm has more headwinds than tailwinds.* Growth: The business is expected to grow by 2% in March, and things will likely get worse in next year as Apple revenue (about 20% of sales) begins to go away. The AI play at the edge is real and could be a positive for ASPs, and the AI Datacenter opportunity is small today, and will remain small in the future.* Street Expects a Beat: Whisper is they hit the high end of their guidance of $12.6B, vs. in print Dec revenue estimate of $12.1B. This would imply 8% growth.* Guidance: Revenue is expected to be $11.2B, which implies 2% revenue growth.* Investors aren’t buying their growth story. QCOM shares have dropped 13% over the last three months vs. Nasdaq down 2%. ). Options imply a 7% move.* Android Strength vs. Share Loss: I expect strong near-term results driven by high-end Android devices. That does not help fears of future market share loss to Apple and Samsung. While Apple share loss has been slower than expected, concerns about the iPhone next year moving to its own modem are consensus, and Samsung's shift to Exynos chips could add more share pressure.* AI Data Center Story is Soft: While management projects Data Center revenue to become material by FY27, I’m with consensus and believe it won’t go far. Sell-side ratings split between Buy and Hold which suggest bad news is more priced in.Source: Gene Munster
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