The earnings results of Qualcomm Inc (NASDAQ: QCOM) for the second quarter show that the multinational semiconductor company surpassed the forecasts of analysts. Qualcomm gets paid more licensing fees and obtains a greater market share in the Asian country.
For the June quarter, the semiconductor giant reported $1.44 billion in net income, higher by 22 percent from $1.18 billion. Meanwhile, non-GAAP revenue increased to $6.04 billion or $1.16 cents per share. This figure is up by 3.6 percent from $5.8 billion during the previous year.
Market analysts estimated that the semiconductor giant will post earnings per share of 97 cents on $5.58 billion revenue.
Qualcomm had a difficult time to grow as the PC market has crashed and smartphone growth becomes sluggish. Late Wednesday, the semiconductor giant stated that it is performing better than the sluggish phone industry, particularly in China. Moreover, it noted that it is overcoming resistance by phone manufacturers in the region to paying for Qualcomm’s patents.
According to IDC Corp, the global smartphone market is on track to expand by just 3.1 percent during the current year after a 10.5 percent growth during the previous year and a 28 percent expansion in 2014.
The Chief Executive Officer of Qualcomm Mr. Steve Mollenkopf stated that while the semiconductor corporation is not seeing any factors that may contradict that type of outlook, the chip manufacturer is performing better within that environment, especially in China. The Qualcomm CEO said that China is the largest national market for mobile phones.
In the chipset industry, which contributes the majority of Qualcomm’s revenue, the semiconductor corporation did better than expected with Chinese mobile phone manufacturers who are holding a greater portion of their home market. At the same time, the company stated that its attempts to encourage more of these phone makers to pay royalties for utilizing the technology of Qualcomm are building momentum and fewer are holding out on cash they owe it.
According to the Qualcomm CEO, “It was a really strong quarter — it was strong in both businesses, in particular the license business.”
“We got some money a little earlier than we would have thought,” Mollenkopf further added.
The company is suing Meizu Technology Co. and is attempting to oblige the Chinese mobile phone manufacturer to negotiate a license deal for utilizing Qualcomm’s technology. Furthermore, President Derek Aberle stated that the chip giant is ready to pursue similar legal action against firms, which are avoiding to pay what they owe.
After the earnings release, the company’s stock surged by 6.8 percent during the after market trading hours.
As of 9:44 AM GMT -4 on July 21, QCOM shares are changing hands at $59.82, up by 7.16 percent or 3.94 points.