The operating and net income at $0.4 billion was down from $0.7 billion a year before. Earnings per share was $0.24 down from $0.5 a year before. The numbers are significantly different as the second quarter of fiscal 2017 results included approximately $970 million in QTL revenues for royalties on sales of Apple or the other licensees products.
Qualcomm expects to see this money at some point, and it is fighting Apple in court for it. This is the downside of the second quarter 2018 when you only look at the numbers, but, on the bright side, the company is shipping millions of Snapdragon 845 to key customers. In the same quarter it started shipping the first wave of Windows on Snapdragon 835 machines and announced the word’s first 2 Gbps modem.
Transformation for a good fiscal 2019
Qualcomm demonstrated the 5G NR with speeds faster than 4.5 Gbps while other competitors including Huawei and Intel didn’t want to reveal much about their plans. Huawei and Intel might both be at least one or more quarters behind Qualcomm when it comes to 5G NR in phone form factor.
NXP remains a hot topic. The fact that NXP extended the acquisition period, due to the problems with the China regulatory authorities is a positive sign. Dutch based NXP (once Philips Semiconductors) understands the value proposition of joining forces with Qualcomm. It simply gets it as otherwise it would just go for the two billion dollars application termination fee, take the money, and run.
Steve Mollenkopf, CEO of Qualcomm said:
“Our fiscal second quarter results reflect better than expected performance in our semiconductor business and lower operating expenses. Looking forward, we remain committed to driving improved performance in fiscal 2019, consistent with our prior guidance. We are making good progress on executing our $1 billion cost plan, are focused on closing our pending acquisition of NXP and are well positioned to drive the global commercialization of 5G.”
The unpopular saving of one billon dollar will cause massive layoffs and reduction of some teams and personell. This is what Qualcomm promised and it is delivering right now. Laying people off is always an emotional thing, but again, it may well be for the greater good.
Mobile, China, Auto grew, Apple still owes 'em
5G NR is when Qualcomm gets to glow again, and frankly that time is just around the corner. It is expected that the next generation phones with the upcoming Snapdragon SoC (855) and the X50 modem will start showing a year from now. Many have told us to expect that the Galaxy S10 will have this SoC and 5G NR modem combo. This phone and many other Android 9 based phones are expected to ship in roughly 11 to 12 months from now. Samsung might be the first again and the others will follow soon after, in Q2 2019 and later.
The company is gaining a lot of traction on the automotive side with its very interesting V2X sensor as well as the general infotainment business and a bunch of new customers. The WiFi group has promised the first versions of 802.11ax to market this year and the IoT guys have some rather interesting products including AI cameras, smart speakers and noise canceling earbuds. Separately the company is making massive gains in 5G interest from six key customers in China and it has big boosts in its RF business.
The mobile industry simply needs players like Qualcomm. Samsung Exynos is for Samsung only, Apple A series SoC is for Apple only and Huawei is making chips for Huawei. There are only Qualcomm and MediaTek left of hundreds of OEMs around the world who want to make a difference with phones. Things with 5G will turn for the better, as the market clearly is after more data. Just think about one thing, no customer cares or uses tohusands of free voice call minutes, the plans are mainly differentiated by data size in 2018 and in the future beyond. As Marta Stewart likes to say, it's a good thing, as this will enable some new Spotifys, Vevo video or Netfix or whatever AR / VR sharing platform happens next. We didnt have Uber before 4G, and now it is hard to imagine life without it.