Why Qualcomm stock is rising today

What happened

Shares of Qualcomm (NASDAQ: QCOM) On Thursday, the semiconductor company reported its fiscal third quarter results. Qualcomm beat analyst estimates across the board, and it revealed a patent license agreement with Huawei. The stock was down about 11.9% at 11:20 AM EDT.

So what

Qualcomm reported revenue of $ 4.89 billion in the third quarter, broadly flat from the prior-year period, recognized by the settlement agreements after withdrawing from last year’s revenue agreement. Apple And its contract manufacturer. Revenue from the chip business grew 7% to $ 3.81 billion, while revenue from the license segment fell 19% to $ 1.04 billion. The total revenue was about $ 100 million which was more than analysts expected.

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Non-GAAP (adjusted) earnings per share came in at $ 0.86, up from $ 0.80 in the prior-year period and $ 0.15 above the average analyst estimate. Earnings before taxes jumped 20% in the chip business, while EBT in the license business sank 28%.

Qualcomm signed a long-term global patent licensing agreement with Huawei in July. The company expects to recognize revenue of $ 1.8 billion in the fourth quarter associated with the agreement, covering Huawei sales since the beginning of 2020.

now what

Qualcomm expects to produce adjusted revenue, excluding Huawei patent agreement revenues of between $ 5.5 billion and $ 6.3 billion in the fourth quarter of the fiscal year. This includes chip revenue between $ 4.3 billion to $ 4.9 billion and licensing revenue between $ 1.2 billion and $ 1.4 billion. The company sees adjusted EPS of between $ 1.05 and $ 1.25.

Qualcomm’s guidance forecast a 15% drop in handset shipments due to COVID-19, with an undisclosed global 5G flagship phone delay, projected to be Apple’s upcoming 5G iPhones. Reports have indicated that mass production of Apple’s new iPhones lags behind schedule.

In Thursday’s rally, Qualcomm stock essentially wiped out all of its epidemic-induced losses. The shares of the chip company are now just below the 52-week high.

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