The Stock Of Qualcomm Sinks As It Faces Weak Smartphone Demand

Shares of Qualcomm Inc. declined in the extended session on Wednesday, following the company’s announcement that it expects inventory issues to persist beyond June due to a downturn in handset demand and its outlook for the future was disappointing. After the company released its results on Wednesday, its shares fell 6.6% in the after-hours trading session. 

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Qualcomm CEO, Cristiano Amon, stated on the conference call with analysts that the company is facing a further deterioration in demand, particularly in handsets, at a greater magnitude than previously forecasted. 

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As the largest business segment of Qualcomm, the company’s handset sales fell 17% to $6.11 billion from a year ago. Additionally, the company’s inventory problems date back to last year when its share price fell to lows not seen in more than two years. 

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Although Wall Street had already anticipated the inventory issues to persist into June, a drop in handset demand has resulted in the extended time frame of inventory drawdowns beyond the previously forecasted end of June. 

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As per Amon, “inventory drawdown dynamics remain a significant factor for at least the next couple of quarters.” 

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In the fiscal second quarter, the company reported a net income of $1.7 billion, or $1.52 a share, compared to $2.93 billion, or $2.57 a share, in the year-ago period, while its total revenue for the quarter fell to $9.28 billion from $11.16 billion in the year-ago period. 

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The company’s auto sales rose 20% to $447 million, and Internet-of-Things sales fell 24% to $1.39 billion for the second quarter.