Qualcomm’s profit forecast for the quarter ending in December came in below the analyst average, underscoring pressure from rising component costs. The company is expanding beyond smartphones, but its new markets have yet to ease concerns about near-term earnings.
December-quarter EPS guidance trails analyst estimates
On November 4, Qualcomm forecast earnings per share of $2.15 to $2.35 for the three months ending in December. The midpoint of $2.25 is below the analyst consensus estimate of $2.32. The range is a company forecast for the current quarter, not a report of results already achieved.
Qualcomm is one of the world’s largest smartphone processor makers, leaving its handset chip business central to how investors assess its performance. The below-consensus guidance puts the focus on how changing costs could affect profits, rather than on revenue opportunities from expanding into other markets alone.
Higher component costs weigh on profits
The company linked pressure on its profit outlook to rising component prices. For chipmakers, higher input costs can weigh on product margins. If that pressure persists, it could limit earnings growth even if sales remain stable. Qualcomm did not disclose the scale of the increases or identify which components are having the greatest effect on the current quarter.
New markets have yet to offset handset concerns
Qualcomm is seeking to broaden its business beyond smartphones to cushion the impact of weakness in the handset market. But the information disclosed does not specify revenue, growth rates or the contribution to current-quarter profits from these newer businesses, making it difficult to assess how much they may offset softness in phones.
For now, the clearest signals are the December-quarter EPS midpoint below analyst expectations and the pressure from rising component costs.