Qulacomm Earns More, Predicts Smartphones Slowdown

Qualcomm, global leader in semi-conductor business and silicon technology has reported a 33 per cent rise in its fiscal Q4, 2013 revenues of $6.48 billion, year-over-year, but predicted a market doom for the smartphones segment in 2014.

Paul Jacobs, Qualcomm CEO told investors during a conference that the outlook for 2014 for the company indicates slower growth due to ‘some mix factors.

“Looking at the fiscal 2014, we are expecting solid growth but at a lower rate than what we delivered in the last few years. This is partially due to the exceptionally strong year we just completed which included share gains and content share gains in QCT. In fiscal 2014 we are facing some mix and demand factors which we currently expect will moderate our QCT growth. In light of this we are taking near-term actions company-wide to prioritize investments, stay focused on growth but also control expenses in order to deliver operating profit growth in excess of revenue growth."

Jacobs noted that the basic drivers of Qualcomm's business--sales of smartphones and other computing devices--remain solid. Indeed, possibly in order to temper the company's expectations of a slowdown next year, the firm forecast "double-digit compound annual growth rates for both revenues and earnings per share over the next five years."

According to Reuter’s reports, Qualcomm has posted double-digit growth every quarter for the past 13 quarters.

But Qualcomm's warning that its growth could slow next year is an indication that the smartphone boom years could be giving way to slower growth rates on less expensive phones in emerging markets.

In its fiscal fourth quarter, Qualcomm notched revenues of $6.48 billion, up 33 percent year-over-year and 4 percent sequentially.

The company's net income clocked in at $1.50 billion, up 18 percent year-over-year and down 5 percent sequentially. In the coming quarter, Qualcomm predicted its revenues would increase year-over-year between 5 and 15 percent.

In the coming fiscal year, Qualcomm said it expects year-over-year revenues to increase by between 5 and 11 percent. Bloomberg noted that forecast for next year is far below the annual gains Qualcomm has enjoyed of up to 25 percent.

Not surprisingly, Qualcomm predicted China would emerge as one of its most important markets, partially due to Chinese wireless operators' plans to upgrade to LTE network technology.

Steve Mollenkopf, Qualcomm's president and COO, said: "We also expect strong growth in the low and mid-tiers, driven by emerging regions, including the anticipated launch of LTE in China in the second half of the fiscal year. We continue to see growth in China across all smartphone tiers and what we refer to as our EA or Emerging Accounts, exceeded $1 billion in revenue in fiscal 2013."