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Qualcomm stock rises following slight earnings beat

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Qualcomm Inc. shares rose in the extended session Thursday after the chip maker slightly beat Wall Street expectations on earnings, and projected confidence amid an outlook that fell just short of the consensus.

Qualcomm
QCOM,
-1.89%

shares rose 3% after hours, following a 1.9% decline in the regular session to close at $135.85.

“The long-term trends driving demand for our differentiated technologies and solutions that enable digital transformation are intact,” said Cristiano Amon, Qualcomm’s chief executive, in a statement. “We are confident in our ability to navigate the near term and remain focused on executing our diversification strategy.”

The company reported fiscal first-quarter net income of $2.24 billion, or $1.98 a share, compared with $3.4 billion, or $2.98 a share, in the year-ago period. The chip maker reported adjusted earnings, which exclude stock-based compensation expenses and other items, of $2.37 a share, compared with $3.23 a share in the year-ago period. Total revenue for the quarter fell to $9.46 billion from $10.7 billion in the year-ago period.

Analysts surveyed by FactSet had forecast $2.36 a share on revenue of $9.6 billion, based on Qualcomm’s forecast of $2.25 to $2.45 a share on revenue of $9.2 billion to $10 billion.

Qualcomm forecast adjusted earnings of $2.05 to $2.25 a share on revenue of $8.7 billion to $9.5 billion for the second quarter. Analysts had estimated earnings of $2.29 a share on revenue of $9.56 billion for the second quarter.

Last quarter, Qualcomm’s share price fell to lows not seen in more than two years after executives said there was up to 10 weeks of inventory in the channel, and forecast a $2 billion shortfall coming off record sales.

And the glut doesn’t appear to bode well for the mobile handset industry as research firm Gartner recently forecast that mobile phone shipments worldwide would fall 4% to 1.34 billion units in 2023, following an 11% drop in 2022.

Read: The world is buying fewer devices, and inventories for PCs, phones and tablets are building

Inventory problems have become a visible plague on the industry after a two-year, COVID pandemic-driven shortage, quickly flipped to a glut in 2022, as seen in earnings reports from Intel Corp.
INTC,
+3.85%

and Advanced Micro Devices Inc.
AMD,
+4.34%
.

Qualcomm shares dropped 39.9% in 2022, while the PHLX Semiconductor Index
SOX,
+2.22%

dropped 35.8%, the S&P 500 index 
SPX,
+1.47%

finished the year down 19.4%, and the tech-heavy Nasdaq Composite Index 
COMP,
+3.25%

shed 33.1%.

Over January, however, markets rallied, and Qualcomm shares surged 21.2%, while the SOX index gained 15.4%, the S&P 500 gained 6.2% and the Nasdaq rose 10.7%.

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