Qualcomm Inc. parlayed the global 5G rollout and Apple Inc.’s inclusion of its chips in the iPhones models into an earnings jump that failed to satisfy investors betting phone-chip sales would be even higher. The mobile-phone chip maker on Wednesday said its quarterly sales rose 62% from the year-ago period to $8.24 billion. Net income for the first quarter of the company’s financial year more than doubled to $2.46 billion.
The company narrowly missed Wall Street’s sales expectations of $8.27 billion but beat the bottom-line protection of net income of $2.09 billion, according to analysts surveyed by FactSet.
Sales of chips for phones came in slightly below investor expectations that had been supercharged by Apple’s strong earnings a week ago. Qualcomm’s stock fell more than 8% in after-hours trading. Qualcomm’s results were healthy, but investors had been hoping for a home-run performance, said Stacy Rasgon, an analyst at Bernstein Research.
Qualcomm’s outlook for the current quarter of sales between $7.2 billion and $8 billion also topped Wall Street forecasts. The chip business is really growing like crazy,” Chief Executive Steve Mollenkopf said. “It’s all the things we’ve been talking about—growth in content and growth in devices that’s significant sequentially and year over year.”
Qualcomm is undergoing a leadership transition. Mr. Mollenkopf plans to retire this summer to be succeeded by current company President Cristiano Amon.
Qualcomm is split into two divisions, one that focuses on making chips and another that profits from licensing Qualcomm’s patented technologies to others. Revenue in the licensing business rose 18% in the quarter, while sales were 81% higher in the chip business.
The company also saw strong growth in newer parts of its chip business. While it made $4.22 billion on chips for handsets, it also surpassed $1 billion in quarterly sales for the first time for chips that go into internet-of-things devices and dedicated circuitry that handles communications with cell towers.