The Six Five team discusses Qualcomm Earnings.
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Transcript:
Daniel Newman: You went on with the always impeccably-dressed John Forte and Morgan Brennan. You talked a little bit about Qualcomm, but let’s talk about it here.
Patrick Moorhead: Yeah, so I actually was on CNBC twice in a week talking Qualcomm, and I really do appreciate being on Morgan and John’s show. So Qualcomm absolutely blew away expectations. It was beat, beat, raise, which was super fun. Surprisingly, they talked about smartphones, which was the big driver, and also automotive, which really hasn’t made the bar aside from their $30 billion backlog. So really impressive. While the company Cristiano and Akash, and I did appreciate talking to them about earnings, didn’t necessarily want to call it the end of the bottom, but I believe that this is the end of the bottom here. They need to be very conservative because they don’t control the China economy. But from all my channel checks and all the data that I’ve seen, the inventory, particularly Android inventory has gone down. Oh, IoT was soft just like everybody else when we talked about with the context of Lattice, but great tailwinds in handsets.
It’s interesting that we saw Xiaomi and a couple other of the big Chinese handset makers launch their handsets the same week that Qualcomm came out with Snapdragon 8 Gen 3. That’s actually a pull-in on the dates they normally do that ’cause typically, you’ll see Qualcomm announced in the fourth quarter and then go live with units in January. I see that as an acceleration, which I think will benefit the company going forward. I have to talk a little bit about their new PC platform, the Snapdragon X Elite. We’ll talk about it a little bit when we get to the Apple event, but they ran up some incredible numbers versus Apple, Intel and AMD. Now, I did not run the benchmarks and neither did Futurum Labs, but at least the methodology looked sound enough for me to at least say it’s going to be a very competitive part. We’ll talk more about that when it comes to the Apple event and M3.
Daniel Newman: Yeah, so you did hit it on the head, Pat. Qualcomm was robust, and again, this is a comparative robustness that we have to talk about. I think it’s only right. Year-on-year, it’s still not where the company wants to be, but we have to be very clear about the headwinds. You’re talking about a company that had over 60% of revenue relationship with China and in an economy in China that’s become incredibly uncertain and to some extent, unstable. Mid double-digit growth in China handset, which means, again, while the diversification strategy, I think, has worked very well, especially automotive, very impressive transformation there under Nakul Duggal’s leadership. But in handsets, it’s been pretty woeful and especially in China. The concern has been palpable and the stock has seen a response. But again, this is, Pat, something I think you said about Lattice. This wasn’t much self-inflected.
When you talk about the innovation and the design and what we saw at Snapdragon Summit, the company continues to out-innovate, out-design, deliver better specs, better SOCs, and better performance to all of the handset makers. This is just a byproduct of less people buying handsets. Even in Apple’s numbers, you saw the Device softness. It wasn’t like Apple’s getting all the market. Nobody is buying smartphones. Now, nobody as in only like a 100 billion this quarter, but I know, dollars not units. The point, though, is the growth is coming in the right places, the turn, the bottoming out of inventory. We’ll talk a bit more about that when we hit AMD here in a moment. But we’re seeing a transformation of where the bottom is. So we saw enterprise stand longer. It’s been more robust because of AI.
We saw industrial devices stick around a little bit longer because companies were implementing technologies to measure analytics. Handsets, consumer stuff fell off the cliff at the end of the P word, and it’s really only slowly coming back. But the slow revival for many people out there that have questioned should be a good indicator, not just Qualcomm, every company in the handset space, all the OEMs. You look at companies like Dell, HP, Lenovo that have had long, slow periods from their device parts of their businesses that should be turning a corner because silicon is often the leading indicator of when those cycles are going to begin. There’s a lot of indication here that things are turning. So no one is saying so much as a bottom, Pat, but you and I have talked to a few CEOs this week, including Cristiano Amon and the positive tenor in their voice is encouraging.
Patrick Moorhead: Yeah. Isn’t it funny what people can tell you without telling you?
Daniel Newman: That’s the art, right?
Patrick Moorhead: Yeah.
Daniel Newman: Actually, I think that’s, we’re professional tell you without tell youer. When you have so much information rattling around in your brain and you’re never 100% sure if it was NDAs, so you just say nothing.
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.
