QUALCOMM, Inc. (NASDAQ:QCOM), a leading developer and innovator of advanced wireless technologies, products and services, today announced results for its fiscal second quarter ended March 27, 2016.
“Our fiscal second quarter results were driven by stronger than expected performance across our chipset and licensing businesses,” said Steve Mollenkopf, CEO of Qualcomm Incorporated. “We are pleased with our continued progress in the licensing business, including the recent conclusion of new license agreements in China and the resolution of our dispute with LG Electronics. 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.”
Non-GAAP results exclude the QSI (Qualcomm Strategic Initiatives) segment and certain share-based compensation, acquisition-related items, tax items and other items. Further discussion and detailed reconciliations between GAAP and Non-GAAP results are included within this news release.
Second Quarter Key Business Metrics
Cash and Marketable Securities
Our cash, cash equivalents and marketable securities totaled $30.0 billion at the end of the second quarter of fiscal 2016, compared to $29.6 billion a year ago and $30.6 billion at the end of the first quarter of fiscal 2016.
Return of Capital to Stockholders
The following table summarizes stock repurchases and dividends paid during the second quarter of fiscal 2016 (in millions, except per share amounts):
On April 8, 2016, we announced a cash dividend of $0.53 per share payable on June 22, 2016 to stockholders of record as of the close of business on June 1, 2016, which represents a 10 percent increase over our prior quarterly dividend.
Effective Income Tax Rates
Our fiscal 2016 annual effective income tax rates are estimated to be approximately 18 percent for both GAAP and Non-GAAP. The effective income tax rates for the second quarter of fiscal 2016 were 21 percent for GAAP and 18 percent for Non-GAAP. The effective tax rate for GAAP of 21% for the second quarter of fiscal 2016 was greater than the estimated annual effective tax rate of 18% primarily due to changes in our estimates related to foreign earnings taxed at rates that are less than the United States federal tax rate and the benefit of the retroactive reinstatement of the United States federal research and development credit recorded discretely during the first quarter of fiscal 2016.
The following statements are forward looking, and actual results may differ materially. The “Note Regarding Forward-Looking Statements” in this news release provides a description of certain risks that we face, and our most recent quarterly report on file with the Securities and Exchange Commission (SEC) provides a more complete description of risks.
Our outlook does not include provisions for future asset impairments or for pending legal matters, other than future legal amounts that are probable and estimable. Further, due to their nature, certain income and expense items, such as realized investment and certain derivative gains or losses, cannot be accurately forecast. Accordingly, we only include such items in our financial outlook to the extent they are reasonably certain; however, actual results may differ materially from the outlook. Our outlook includes an estimate of the benefit related to stock repurchases that we plan to complete.
We have not included any estimates related to the proposed joint venture with TDK Corporation in our fiscal 2016 outlook. The joint venture is expected to close by early calendar 2017. We expect the joint venture to be accretive to Non-GAAP earnings per share in the 12 months following the transaction close.
The following table summarizes GAAP and Non-GAAP guidance based on the current outlook. The NonGAAP outlook presented below is consistent with the presentation of Non-GAAP results included elsewhere herein. (Original Source)
Shares of Qualcomm are down 2.5% to $50.80 in after-hours trading. QCOM has a 1-year high of $71.32 and a 1-year low of $42.24. The stock’s 50-day moving average is $51.50 and its 200-day moving average is $50.56.
On the ratings front, Qualcomm has been the subject of a number of recent research reports. In a report released today, Canaccord Genuity analyst Michael Walkley assigned a Buy rating on QCOM. Separately, on April 18, Credit Suisse’s Kulbinder Garcha reiterated a Buy rating on the stock and has a price target of $67.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Michael Walkley and Kulbinder Garcha have a total average return of 14.8% and 7.9% respectively. Walkley has a success rate of 58.3% and is ranked #23 out of 3812 analysts, while Garcha has a success rate of 52.2% and is ranked #320.
The street is mostly Bullish on QCOM stock. Out of 19 analysts who cover the stock, 11 suggest a Buy rating and 8 recommend to Hold the stock. The 12-month average price target assigned to the stock is $58.11, which implies an upside of 11.6% from current levels.
QUALCOMM, Inc. engages in the development, design, manufacture, and marketing of digital telecommunications products and services. It operates through three segments: Qualcomm CDMA Technologies, Qualcomm Technology Licensing, and Qualcomm Strategic Initiatives. The Qualcomm CDMA Technologies segment develops and supplies integrated circuits and system software based on technologies for the use in voice and data communications, networking, application processing, multimedia, and global positioning system products.