Qualcomm [NASDAQ:QCOM] today reported their earnings for the first fiscal quarter of 2014, 1Q 2014 (calendar 4Q 2013), with profit of $1.88 billion on record revenues of $6.62 billion. This represents a reduction of profit by 2% year over year and an increase of 25% over the previous quarter. Revenue was up 10% year over year and 2% sequentially, representing solid revenue growth and the record numbers.
Qualcomm’s non-GAAP figures showed identical revenue growth, however, their profit was $2.16 billion as opposed to $1.88 billion in their GAAP accounting methods. This was due to the fact that Qualcomm took in a $665 million gain ($430 million after tax) due to the the sale of their Omnitracs division, which we had reported on a little over a year ago. This was partially offset by their writedown of $444 million to their QMT division, which is their Mirasol technology division which has a MEMS fab. This is in addition to the $1 billion writedown that Qualcomm had initially announced that they would invest in the building of the fab back in 2011.
They also saw MSM shipments go beyond expectations, which was the reason for the record increased revenues with shipments of 213 million units, up 17% year over year and 12 percent over the previous quarter. They also guided their fiscal Q2 2014 revenue to be $6.1 billion to $6.7 billion, about even to 9% growth year over year. They also guided their non-GAAP diluted EPS to be $1.15 to $1.25 per share, which represents a decrease of 2% to an increase of 7% year over year. I believe that Qualcomm will report an increase in that quarter and exceed their expectations of any losses. They also expect MSM shipments to continue on their growth trend with shipments of 180 million to 195 million expected in the quarter, which is a seasonally expected decrease over fiscal Q1 which is traditionally their biggest quarter of the year.
Based on this news, Qualcomm’s stock is trading up 2.5% on the news even though the stock traded down 1.21% on the overall market’s downward trend for the day. Thankfully for Qualcomm’s investors, the company’s outlook appears to be fairly strong and expectedly close to last year’s record year. It will be interesting to see if the company will introduce any new product lines that could facilitate the company’s continued growth and whether they will finally introduce an ARM server product line like AMD did yesterday. It will also be interesting to see how much of an impact Qualcomm’s RF360 will have, depending on the attach rate that they get and how much that will affect the company’s overall margins.