The Six Five team discusses the latest earnings report from Qualcomm.
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Transcript:
Patrick Moorhead: So Daniel let’s jump right in to Qualcomm earnings.
Daniel Newman: Yeah, it was a big week for Qualcomm. I think everybody had eyes. Remember we’re coming on earnings palooza. We’re coming off every company, not every, but legitimately the entire fang or now what Jim Cramer calls mamma, Meta is stupid anyway all reporting. And there were a lot of eyes. I kind of like what’s going on. And was this quarter going to be good? Was it going to be bad? We’ve had so much growth for many parts of tech, but the chip shortage has been back in focus in a big way. And so watching the semiconductor companies, whether that’s been Intel, whether that’s been AMD and now of course, Qualcomm was all in focus. Qualcomm absolutely positively hammered it on every front on the revenue side 43% year over year growth on the earning side up 76% year on, year on the supply chain, not a lot of comments, but long and short, the company didn’t seem to have a lot of problems with it.
And having had the chance to talk to Cristiano Amon, the CEO ahead of times, it seems like the company had a really good handle on its demand. It was working with its supply chain effectively, and it was able to meet the market demand for its products and be able to realize these kinds of numbers, Pat. The company really has in focus its QCT business. Now prior to becoming CEO, that’s what Cristiano was responsible for and definitely sense his passion for the past few years, whether that’s been the adjacent businesses like IOT automotive and RF, and of course, handsets with this onslaught of interest in 5G. And this being an area where the company is quickly looking to diversify beyond being known as the company that provides chips for mobile handsets and really to being a bigger contributor to these large secular trends and the company is showing it is able to do that.
So quick breakdown, Pat, handsets continue to be the biggest part of the business in this quarter was about 4.6 billion of the 7.733. So you could say, it’s a handset focused company, but on the other hand, 38% now of the revenue from the QCT business is coming from its other three adjacent businesses. Which is the RFFE, which we’ll actually talk more about in the next segment as well, automotive and IOT.
And the company Pat now has four segments, well almost $4 billion annual businesses and three of them now are a billion dollar a quarter plus businesses and with huge growth. So in the fourth quarter, RF front end grew 45%. And now they’re the number one in wireless RFFE automotive 44%, and IOT grew 66%. And now this QCT business is representing $27 billion a year. So I want to leave a little bit there for you because the company did make some announcements on some other things, but my big takeaway on their earnings, extraordinarily strong, the company is diversifying its business. It is growing a good clip. It’s managing its supply chain well, and it’s in these right secular trend areas to be able to grow long term. And it’s been a great first two quarters under the leadership of Cristiano Amon.
Patrick Moorhead: Yeah. It was really a somewhat of a repeat from a prior quarter, which was, it was pretty awesome, right? One big thing they did is they did talk about the future and essentially that they’re going to have double digit growth into the next year, which I thought was pretty awesome. The other thing that I really appreciated was a slide that they did, where they compared what they had said in 2019 about FY 22. They actually hit those numbers a year early. And the reason I thought that was important is if you remember back in maybe 2017, 2018, Qualcomm was not looked at like a company according to its institutional investors who could hit and execute on those growth factors. And basically they did, and they did it a year early. And I think that’s super impressive.
I think the other thing that I thought was interesting was that they had all this growth during a supply chain crisis, and Qualcomm has a very distributed manufacturing strategy. Meaning they literally work with every fab on, on the planet, okay? Every foundry and they also do some contract manufacturing out as well. A lot of people had looked at that earlier a few years back and said, “Boy, that’s complex.” “That makes no sense.” “It increases risk.”
Well, I certainly think it’s paying off at this point for them. Being such a large company Qualcomm does have an advantage of having a very wide and deep supply chain, but they’re disaggregated supply chain and manufacturing strategy I think is really paying off.
Daniel Newman: I know we got to move on, but very impressive. I’ll leave it at that made my appearance of on Yahoo Finance very easy.
Patrick Moorhead: No, for sure.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
