Qualcomm forecasts current-quarter revenue above estimates

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(Reuters) – Qualcomm Inc (O:) forecast second-quarter revenue largely above Wall Street estimates on Wednesday, in the latest sign that a protracted slowdown in the global chip industry has bottomed out.

Shares of the company, the world’s biggest supplier of mobile phone chips, were up more than 1% in after-hours trading.

The above-estimates forecast comes weeks after chipmakers Intel Corp (O:) and Texas Instruments (O:) calmed investor nerves with their upbeat annual forecasts. Analysts view 2020 as a recovery year for chipmakers, driven by 5G spending for both smartphones and network upgrades.

Chief Executive Officer Steve Mollenkopf attributed the strength to higher demand for the company’s radio-frequency chips for mobile phones, a relatively new business where Qualcomm is trying to persuade phone makers to include more of its chips as the devices become more complex for 5G networks.

The company’s chips are essential components in many mobile devices and it is a top supplier to South Korean smartphone makers Samsung Electronics (KS:) and LG Electronics (KS:), as well as Apple Inc (O:).

Qualcomm forecast total revenue in the range of between $4.9 billion and $5.7 billion for its second quarter, the mid-point of which is largely above analysts’ average estimate of $5.08 billion, according to IBES data from Refinitiv.

The chipmaker said its forecast includes an estimate of the potential impact of the recent coronavirus outbreak in China, adding that the actual impact may differ.

Qualcomm, which generates most of its profits by licensing its technology to mobile phone makers and others, said the segment reported revenue of $1.54 billion in the first quarter, above estimates of $1.41 billion, according to FactSet.

Excluding items, the company earned 99 cents per share, topping analysts’ average estimate of 85 cents.

Revenue rose 5% to $5.08 billion, beating analysts’ estimates of $4.83 billion.

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