Tag Archives: technology

Qualcomm Fiscal Q2 Earnings Top Estimates, But EPS Guidance Shy

Chip supplier Qualcomm ( QCOM ) posted better than expected fiscal second-quarter earnings after the market close Wednesday, but its EPS guidance lagged estimates, and shares were down nearly 3% in after-hours trading. Qualcomm reported revenue of $5.6 billion for the quarter that ended March 27, down 19% from the year-earlier quarter but beating the consensus estimate of $5.34 billion. Earnings per share minus items fell 26% to 1.04, but that number topped the 96-cent consensus estimate of analysts polled by Thomson Reuters. For its fiscal third quarter, Qualcomm guided to sales of $5.2 billion to $6 billion; the midpoint, $5.6 billion, was down 4% from the year-earlier quarter, but it was slightly ahead of the analyst consensus estimate of $5.56 billion for the quarter that ended March 27. Still, Qualcomm projected Q3 EPS in the range of 90 cents to $1.00, vs. 99 cents last Q3 and below the consensus of $1.02. Qualcomm CEO Steve Mollenkopf pointed to the quarter’s bright spots. “We delivered a stronger-than-expected quarter as we continue to execute our strategy for the next phase of growth,” Mollenkopf said in the company’s earnings conference call. “2016 is a transition year for Qualcomm, and we are making good progress.” He said that progress includes in its licensing business, but he said that stronger than expected performance across all of Qualcomm’s chipset and licensing businesses drove the Q2 beat. Tough contract negotiations have stunted Qualcomm’s licensing revenue growth, along with a royalty dispute with South Korea-based LG. Last year, there were a number of lawsuits globally related to Qualcomm’s licensing business. Investors are also concerned about the under-reporting of device sales among China vendors. The completion of new licensing deals has helped to alleviate those concerns. With its earnings results, Qualcomm announced that it had resolved a licensing dispute with LG “through good faith negotiations” that provides LG access to Qualcomm’s broad portfolio of patented technologies. “We are continuing to build momentum into the second half of our fiscal 2016 with traction for our Snapdragon processors in the premium and high tiers and strong execution of our strategic realignment plan,” Mollenkopf said. The Snapdragon chips are in such phones as Samsung’s new Galaxy S7 and S7 Edge. China Remains A Priority For Qualcomm As part of its transition, Qualcomm has focused on a $1.4 billion cost reduction plan, boosting cash flow and profit, bolstering research and development, positioning for industry growth and making China licensing a top priority, among other steps. The company says that it’s on track to realize at least $700 million in savings in fiscal 2016, an increase of $100 million from its original estimate. Mollenkopf said that Qualcomm has more than 100 licensing deals with companies in China and is in active discussions with others. The company has made notable progress signing China license agreements, Michael McConnell, an analyst with Pacific Crest Securities, said in a research note prior to the earnings report. It’s inked four of the top five China smartphone makers, led by Lenovo, to new license agreements, he wrote. Qualcomm said that its MSM (Mobile Station Modem) chip shipments reached 189 million, down 19% year over year but above the midpoint of its guidance range. For Q3, it expects MSM shipments of about 175 million to 195 million units, down 13% to 22%. Its MSM chipsets target higher-end smartphones. Sales of cellphones based on Qualcomm chips totaled $70.1 billion, down 8% but above the midpoint of the company’s guidance. Qualcomm ended the year with $30 billion in cash and equivalents. In fiscal Q2, Qualcomm’s chip technology unit, called QCT, reported revenue of $3.3 billion, down 25% year over year. Its licensing unit, QTL, reported revenue of $2.1 billion, down 12%. Mollenkopf said that growth markets for Qualcomm include automotive, wearable devices and the Internet of Things.  

SolarCity Flames On San Francisco Ordinance; Sunrun Sued

SolarCity ( SCTY ) stock flamed Wednesday, leading shares of rivals Vivint Solar ( VSLR ) and Sunrun ( RUN ), on a San Francisco, Calif., mandate requiring that solar panels be installed on most new construction under 10 stories tall. SolarCity stock rose 7.8% Wednesday. It was up as much as 13%. Shares of Sunrun and Vivint Solar rose a respective 3.6% and 1%. Introduced by San Francisco County Supervisor Scott Wiener, the ordinance requires solar panels or a solar-powered heating system be installed on new residential construction shorter than 10 stories and on new commercial buildings smaller than 2,000 square feet. The SF Board passed the measure unanimously on Tuesday. It goes into effect Jan. 1. Current California law already requires 15% of certain new construction to be “solar ready,” meaning it’s in an unshaded area. Wiener’s legislation builds onto San Francisco’s already burgeoning green efforts. In 2004, the city introduced a choice aggregation program dubbed CleanPowerSF. Sunrun Faces Four New Class-Action Lawsuits Over IPO In other solar news, Sunrun became the subject of four new class-action lawsuits on Tuesday alleging the No. 2 residential installer by market value “negligently prepared” its IPO, according to a claim by the Shareholders Association. The lawsuits stem, in part, from Nevada regulators’ decision in December to cut net-metering payments to solar customers. More recently, the Public Utilities Commission opted to not grandfather in existing customers under the old rates. New York, N.Y., law firm Levi & Korinsky alleges Sunrun’s IPO contained materially false or misleading statements related to its historical operating costs “by not disclosing the fixed grid costs being borne for it by public utilities where net metering-programs were being employed.” The claim further alleges Sunrun is charging well above wholesale rates for electricity sold to net-metering customers, didn’t have customers dispersed across 15 states and said “Sunrun’s ability to continue convincing customers to sign 20-year contracts was in jeopardy.” Sunrun went public in August 2015, opening below its 14 IPO price. Shares closed Wednesday at 7.27, 48% off Sunrun’s initial price.

Citrix Grows EPS, Sales Faster Than Modeled After Reorganization

Apparently not too distracted by its reorganization, the highest-rated issue in IBD’s Computer Software-Specialty Enterprise industry group,  Citrix Systems ( CTXS ) boosted its Q1 earnings faster than analysts had expected. Reporting after the market close, the maker of cloud management software said Q1 adjusted earnings rose 81% to $1.18 per share, where Wall Street expected 92 cents. Revenue rose 8.5% to $826 million, while analysts polled by Thomson Reuters had modeled $789 million. Citrix stock was up nearly 7% in after-hours trading, following the company’s Q1 earnings release. Shares closed up a fraction, at 80.56, in the stock market today , just 4% off a four-year high of 84.17, hit on Oct. 28. “I am very pleased with our performance this quarter on both the top line and bottom line,” Citrix CEO Kirill Tatarinov said in the company’s earnings release. “The progress we made in refocusing the company — simplifying our portfolio and sharpening our message — is starting to pay off. “We are seeing a strong improvement in our operating margin, and our focused strategy has made it easier for our field teams and channel partners to execute; consequently, we saw improvement in the top line. It gives us a measure of confidence that we are on the right path, and it gives us opportunities to solidify our leadership position in our core areas.” Q1 marks Citrix’s fourth consecutive quarter of double-digit earnings growth following three quarters of 2%-to-7% growth. Profits have outperformed sales, up by only single-digit percentages, now for seven straight quarters. Last week, Robert W. Baird analyst Steven Ashley reiterated an outperform rating with an 85 price target on Citrix stock. He said Baird had surveyed 96 Citrix channel partners and got back mixed results, “consistent with management’s guidance that factored in normal (Q1) seasonality and allowed for possible disruptions from reorganizational activity.” “We continue to believe prospects for improved channel performance are underappreciated,” Ashley said. The company’s reorganization included the layoff of about 1,000 employees and contractors in December and January, the pending spinoff of Citrix’s GoTo lines and a $200 million annual reduction in other operating expenses. In February, Kevin Parker, former CEO of Deltek, was named chairman of the GoTo spinoff, expected to be completed late this year. The third-largest in IBD’s Computer Software-Specialty Enterprise industry group, Citrix boasts a $12.45 billion market cap, half the size of the largest, VMware ( VMW ), but barely smaller than CA ( CA ). However, VMware carries an IBD Composite Rating of 47, compared with CA’s 54 and Citrix’s 92, meaning Citrix is outperforming  92% of all S&P 500 stocks based on earnings, sales, institutional ownership and other fundamental metrics.