Qualcomm’s recovery looks slow due to high inventories

(Bloomberg) — Qualcomm Inc., the world’s biggest seller of smartphone processors, warned that some customers are still working through a glut of chip inventory even as the industry begins to recover.

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The company said in its quarterly report Wednesday that near-term inventory remains high and some customers are continuing to reduce their stock. The excess inventory has contributed to a year-long slowdown in the market for phone chips, Qualcomm’s biggest market.

Qualcomm said total sales in the fiscal second quarter will be $8.9 billion to $9.7 billion. This was in line with the average analyst estimate of $9.36 billion. Excluding some items, profit for the current quarter will be $2.20 to $2.40 per share, while the average estimate is $2.26.

Investors are looking for signs that consumers are upgrading their smartphones at a faster pace. On that front, Qualcomm had good news: Handset revenue grew 16% last quarter, compared to a 27% decline in the prior three months.

Qualcomm also said Wednesday that Apple has extended the patent licensing agreement for two years. Now it will run till March 2027.

While Chief Executive Officer Cristiano Amon is trying to reduce its reliance on the phone market with forays into automotive and personal computer chips – Qualcomm’s earnings are still heavily influenced by demand for handsets, especially in China.

After early gains in extended trading, Qualcomm shares slipped less than 1%. Earlier, during regular trading in New York, they had closed at $ 148.51.

In the fiscal first quarter, which ended Dec. 24, profit, excluding some items, was $2.75 a share. Revenue was up 5% to $9.9 billion. Analysts had expected profit of $2.36 and sales of $9.54 billion.

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