Prominent chip maker Qualcomm tried to maintain a positive outlook Wednesday despite the collective year-over-year and sequential slide of its revenues, operating and net incomes and earnings per share (EPS) in the company’s fourth fiscal quarter 2015.
“Our fiscal fourth quarter revenues and EPS were at the high end of our expectations, with stronger-than expected MSM chipset shipments offsetting slower than expected progress concluding new license agreements in China,” Qualcomm CEO Steve Mollenkopf said. “We are encouraged by customer reaction to our flagship Snapdragon 820, are on track to deliver on our fiscal 2016 cost reduction targets and expect to exit fiscal 2016 on an improving financial trajectory.”
But the company’s earnings report painted a more distressing picture.
The company posted revenues of $5.5 billion for the quarter, a decrease of 18 percent year over year and six percent from the previous quarter. Operating and net income both dipped to $1.1 billion each, marking a downward shift of more than 40 percent year over year in each category. Diluted EPS also followed the downward trend, dropping to 67 cents from $1.11 last year and 73 cents the previous quarter.
Those figures were also down for fiscal 2015 as a whole, with the company’s $25.3 billion in full-year revenues dropping five percent, operating income diving 23 percent, net income dipping 34 percent and EPS dropping 31 percent from 2014 levels. Total device sales were up two percent year over year to $58.3 billion and up three percent for the full year to $250.9 billion.
Part of the company’s difficulties in fiscal year 2015 stemmed from a $975 million charge for an antitrust settlement with China’s National Development and Reform Commission in the second quarter, the company said. Bloomberg reported that Qualcomm has also been struggling to collect licensing fees for devices sold in China and is also facing difficult patent licensing negotiations. Mollenkopf said, however, the licensing issues only marked a delay in signing agreements rather than a change in the company’s ability to complete deals in that market. Technology licensing deals account for nearly 60 percent of Qualcomm’s operating income.
According to Wednesday’s report, the company shipped 203 million of its high-end MSM chips in the quarter, a decrease of 14 percent year over year and 10 percent sequentially. Full year chip shipments, however, were up eight percent year over year to 932 million.
The financial difficulties shouldn’t come as a surprise to those who have been watching the company over the past several months.
In September, Qualcomm announced it laid off 1,300 employees in San Diego as part of a “Strategic Realignment Plan” to slash its workforce by 15 percent and trim $1.4 billion from its annual expenses. The move came after the company’s net income plummeted by 47 percent to just $1.18 billion while revenue fell 14 percent to $5.83 billion in the July quarter.
Mollenkopf said the restructuring plan would help the company make “fundamental changes to position Qualcomm for improved execution, financial and operating performance” and “drive meaningful change in the near term.”
The company’s current guidance puts revenues for the first fiscal quarter of 2016 between $5.2 billion and $6.0 billion and MSM chip shipments at 225 million to 245 million. Total reported device sales for the same period are forecast to be between $50 billion and $58 billion.
As of 9:40 a.m. Thursday, Qualcomm stock was down more than 9 percent on the news.