Qualcomm Gives Solid Outlook in Sign of Smartphone Recovery

(Bloomberg) — Qualcomm Inc., the world’s biggest seller of smartphone processors, gave a solid forecast for the current period, suggesting that handset demand continues to recover.

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Revenue in the three-month period ended in June will be $8.8 billion to $9.6 billion, the company said in a statement Wednesday. Excluding certain items, earnings will be $2.15 to $2.35 a share. Analysts had projected sales of $9.08 billion and profit of $2.16 a share.

The outlook signals that demand has begun to bounce back after a two-year slump. Qualcomm has said that it expects a gradual recovery for smartphones in 2024.

The shares rose about 5% in extended trading following the announcement. They had earlier closed at $164.03 in New York trading, a gain of 13% this year.

Over the longer term, Chief Executive Officer Cristiano Amon has been trying to decrease reliance on phone chips by pushing into personal computers, vehicles and other markets. But Qualcomm remains heavily dependent on demand for handsets, particularly in China.

In the second quarter, which ended March 24, profit was $2.44 a share, excluding some items. Revenue rose 1% to $9.39 billion. Analysts had estimated profit of $2.32 and sales of $9.32 billion.

Revenue from the smartphone segment gained 1% last quarter, a slowdown from the 16% increase in the previous three months.

Qualcomm’s Internet of Things group, which creates electronics for web-connected appliances, has suffered from a glut of inventory. Revenue at that unit was down 11%. Qualcomm’s automotive sales rose 35%.

The San Diego-based company’s main product is a processor that runs many of the world’s best-known phones, including many of Samsung Electronics Co.’s Galaxy line. It also sells the modem chips that connect Apple Inc.’s iPhone to networks.

An additional portion of Qualcomm’s profit comes from licensing the fundamental technology that underpins all modern mobile networks. Phone manufacturers pay these fees whether they use Qualcomm-branded chips or not.

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