Shares of Qualcomm Inc. (QCOM, Financial) plunged 5.47% at $69.16 in after-hours trading on Wednesday although the company beat consensus estimates on non-GAAP earnings for the third quarter of fiscal 2019 by 5 cents. The company posted 80 cents in net profit per diluted share. Non-GAAP earnings worsened 20% year-over-year.
Non-GAAP revenue totaled $4.9 billion, down 13% from the prior-year quarter. It fell $230 million short of expectations.
The global digital communication products manufacturer operates through three segments: Qualcomm CDMA Technologies or QCT, Qualcomm Technology Licensing or QTL, and Qualcomm Strategic Initiatives or QSI.
QCT’s non-GAAP revenue declined 13% to $3.6 billion, earnings before taxes decreased 17% to $504 million and mobile station modem chipset unit shipments fell 22% to $156 million.
QTL’s non-GAAP revenue decreased 10% to $1.3 billion, and earnings before taxes went down 13% to $898 million.
Non-GAAP results do not include the QSI segment.
Despite GAAP earnings shooting up 116% to $1.75 per diluted share, Qualcomm missed forecasters by $2.06.
GAAP revenue of $9.6 billion grew 73% and operating cash flow soared 139% to $4.9 billion.
GAAP results were impacted by licensing revenues of $4.7 billion following the agreements that the company reached with Apple and its contract manufacturers in the third quarter to settle certain litigation between the parties. Also, $150 million of revenue came from an interim agreement the company had with Huawei.
In contrast, results were negatively influenced by tax expenses of $2.5 billion resulting from write-offs and by a $275 million fine from the European Commission.
Moreover, Qualcomm used $755 million to pay dividends in the third quarter of fiscal 2019.
On Sept. 26, Qualcomm will pay 62 cents per common share to shareholders of record Sept. 12. The ex-dividend date is scheduled for Sept. 11.
In the first three quarters of fiscal 2019, the company allocated $22.2 billion to buy back shares of its own common stock. As of June 30, the company can still retire $7.8 billion of its own common shares under the $30 billion share repurchases program, which was authorized and announced in the last quarter of fiscal 2018.
As of June 30, the balance sheet of Qualcomm had $14.36 billion in cash and short-term investments, and $16.43 in total debt. The equity was worth $5.46 billion.
For the final quarter of fiscal 2019, the company forecasted revenue of $4.3 billion to $5.1 billion versus analysts’ projections of $5.63 billion.
The revenue guidance does not include Qualcomm Technology Licensing revenue for royalties due by Huawei because the second interim agreement with the Chinese company expired in the third quarter and the parties have not made a new one yet.
Qualcomm guided for non-GAAP earnings per diluted share of 65 cents to 75 cents versus estimates of $1.08 and for GAAP earnings per diluted share of 38 cents to 48 cents.
Year to date, the share price of Qualcomm increased 29%, closing at $73.2 on Wednesday for a market cap of $88.98 billion and a forward dividend yield of 3.32% versus the S&P 500 index of 1.88%. The forward dividend yield for the industry had a median of 2.16% as of Wednesday. The 52-week range was $49.1 to $90.4.
Disclosure: I have no positions in any security mentioned.
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