Key Highlights

● Qualcomm will release fiscal fourth-quarter and full-year results after the market close.

● July handset Revenue fell by a fifth while automotive jumped by three-fifths to a record.

● Fourth-quarter guidance from July sat below third-party estimates.

● Management pointed to memory supply, higher input costs and a new Data Center effort.

Qualcomm (NASDAQ:QCOM) is due to release its fiscal fourth-quarter and full-year results after the market closes on Wednesday, with a conference call set for the afternoon in California. The company confirmed the schedule in an announcement issued in late October and said the release would also be filed with the Securities and Exchange Commission on a current report. As of this writing the results themselves have not been published.

What is available is the framework the company laid out three months ago. When it reported the third quarter in late July, Qualcomm showed revenue of just under $10 billion, a slump in handset sales, a record in automotive sales and a guidance range for this quarter that sat below what data providers had compiled. Chief Executive Officer Cristiano Amon spoke of a challenging memory and Supply environment, yet called the period a significant inflection point in executing the growth strategy.

When and how will Qualcomm report?

The company said it would publish its results on a Wednesday after the market close on its company website, and that the same release would be furnished to the Securities and Exchange Commission. The conference call begins at a quarter to two in the afternoon Pacific time and is broadcast live over the internet, with a replay normally posted afterward.

The announcement was issued in late October, a few weeks ahead of the date. Qualcomm's fiscal year ends in late September, so the report covers the quarter ended then and also closes the full fiscal year, which makes it the occasion for the company to talk about the year ahead.

A market data service listed the date and noted that Options pricing implied a move of several percent in either direction after the report, and that the shares had gained somewhat since the July release up to the start of this week. Those market-implied figures are third-party estimates, not company statements, and they can change quickly.

What did the July report show about the business?

For the quarter ended in late June, Qualcomm reported total revenue of about $9.9 billion, down about 4% from a year earlier. Earnings Per Share on a generally accepted basis were $1.87, and on an adjusted basis $2.21, down roughly a fifth from the year-ago quarter.

The chip segment, known as QCT, produced about $8.5 billion, down about 5%, with segment earnings before tax at about 26% of revenue against 30% a year earlier. The licensing segment, QTL, produced about $1.3 billion, down about 3%, and kept an earnings Margin of roughly 70%.

Through nine months, revenue totaled about $32.8 billion, nearly level with a year earlier. The lower margin in the chip segment reflected higher input costs and a weaker mix, while the licensing segment, which collects royalties on patents tied to mobile devices, remained steady and highly lucrative.

Why did handset sales fall by a fifth?

Handset revenue came in at about $5.1 billion, down about 20% from roughly $6.3 billion a year before. Third-party coverage of the July report attributed the decline to memory supply constraints, higher input costs and adjustments in inventory by phone makers, particularly Android manufacturers.

Memory chips are a major part of the cost of a smartphone. When memory prices rise, phone makers often raise prices, cut specifications or order fewer units, and each of those choices can reduce Demand for the processors that Qualcomm supplies. The company said it expected to offset higher semiconductor input costs over time through price increases.

Management also indicated that some pressure in the Android market, especially in China, might be nearing a low point, according to a summary of the call. Whether that view is borne out will be one of the first questions listeners ask on the new call, because handsets remain the largest single source of the company's revenue.

How big has automotive become?

Automotive was the bright spot. Revenue reached about $1.6 billion, a record, up about 61% from roughly $1 billion a year earlier. A summary of the call said it was the 20-third straight quarter of double-digit growth, and that management lifted its annualized run-rate view for the Business to about $7 billion from $6 billion.

The same summary cited a lead compute silicon agreement with BMW and expanded work with Stellantis. Qualcomm supplies chips for digital cockpits, connectivity and driver-assistance systems, and car makers sign multi-year design commitments that can create a long revenue stream after a model enters production.

Automotive and the Internet of Things segment together grew about 28% in the quarter. The Internet of Things line, which covers chips for consumer devices, industrial products and networking equipment, produced about $1.8 billion, up about 9%.

What guidance did Qualcomm set for the fourth quarter?

The company guided to total revenue of $9.7 billion to $10.5 billion, with chip revenue between $8.4 billion and $9 billion and licensing revenue between $1.2 billion and $1.4 billion. Adjusted earnings per share were guided to between $2.05 and $2.25.

Generally accepted earnings per share were guided to between $1.22 and $1.42. The company excludes stock-based pay, acquisition-related items and certain other charges from the adjusted figure, and it noted that its strategic venture unit was expected to contribute nothing to the quarter.

A third-party summary said both the revenue and earnings ranges sat below the consensus gathered by data providers at the time, roughly $10 billion and $2.36. It also reported that shares closed about 4% lower on the day of the release. The new report will show where the actual results fall in relation to the range.

What is the data center effort and where does it stand?

Qualcomm has been trying to build a business supplying chips and systems to data center operators, a market dominated by a few much larger rivals. A third-party summary of the July call described the effort as early, with initial product introductions expected later this calendar year, and said it was part of management's expectation of non-handset growth above 60% in the coming fiscal year.

The company completed its Acquisition of Modular, a software company, in the period, and the third-quarter statement shows Goodwill on the Balance Sheet rising to about $14.3 billion from about $11.4 billion at the end of the prior fiscal year. The summary said the Modular deal is meant to support the software stack that data center customers need.

Because data center products had not yet reached Volume shipments in the July report, the new call may offer the first detail on timing and customer interest. Until revenue appears, the effort remains an aim rather than a reported result.

How is the company handling cash and capital?

Through nine months, net cash from Operating Activities was about $8.4 billion, compared with about $10 billion a year earlier, while Capital spending roughly doubled to about $1.6 billion. Acquisitions and other deals, net of cash acquired, totaled about $1.6 billion.

The company paid dividends of about $973 million in the third quarter, or $0.92 per share, and retired about 8 million shares at a cost of roughly $1.4 billion, for a total of about $2.3 billion paid out to stock owners in the quarter. Over nine months, it paid about $2.9 billion in dividends and spent nearly $6.8 billion on retiring shares.

At the end of June the company had about $4.5 billion in cash and cash equivalents and nearly $3.8 billion in marketable securities. Readers will look at the new filing to see whether the pace of share retirement and the new acquisition spending changed in the final quarter.

Which restructuring and accounting items matter?

The July release listed several items outside the adjusted figures: about $101 million in acquisition-related charges, about $70 million in restructuring and related charges, and a Revaluation of deferred compensation that cut operating expenses by an amount that was exactly offset in gains on financial assets. The company also continues to record interest connected to a long-running European Commission fine.

The adjusted tax rate for the quarter was 12.5%. A difference between the generally accepted and adjusted measures of about $0.34 per share in the quarter shows how much the company sets aside, with the largest part coming from stock-based pay at $0.72 per share in the fourth-quarter guidance.

Those details do not alter the headline numbers but explain why two different earnings figures will appear in the new release. Readers comparing coverage should check which one a given article is using.

Where does Qualcomm sit in the sector and the index?

Qualcomm is a core name for readers following Technology Stocks, because it combines a Patent licensing business with chips for phones, cars and connected devices. That mix gives it exposure to consumer electronics cycles, to the automotive shift toward software-defined vehicles and, increasingly, to artificial intelligence processing at the edge and in the data center.

The shares trade on the Nasdaq and are a component of the Nasdaq 100, which means many benchmark-tracking products carry them. The listing says nothing about the quality of the business, though it helps explain why trading around earnings tends to be heavy.

Peers such as Apple, which has been developing its own modem, and the large makers of mobile processors in Asia form the competitive backdrop. Any shift by large phone makers toward in-house chips would add importance to the Diversification story, although the July release did not quantify such an effect.

What questions are likely to dominate the call?

Handsets come first. Listeners will want to hear whether the decline in that segment moderated in the fourth quarter, whether memory costs have eased or worsened, and whether the price increases mentioned in July have reached customers.

Automotive and the Internet of Things come next. The company has set a high bar by raising its annualized automotive figure, and the call may show whether new design wins, including the BMW and Stellantis work, are on track. The data center effort will also draw questions about product timing and customer commitments.

Finally, there is the guidance for the first quarter of the coming fiscal year. Management has said it expects non-handset revenue to grow quickly in the coming year, and the first-quarter range will be an early test of how much of that growth is already in the order book.

How should readers treat early coverage?

In the first minutes after any earnings release, headlines focus on comparisons with consensus figures from data providers. Those comparisons rely on third-party estimates that differ from one provider to the next and can change between the morning and the evening of the report.

The company's own tables and its call transcript are the primary sources. Definitions for adjusted measures, the reconciliation to generally accepted figures and the segment breakdowns are all in the release and the attached schedules.

Why does the fiscal year-end matter?

A fiscal year-end report is more than another quarterly update. It sets the base against which management will measure growth in the coming 12 months, and it often brings the first formal commentary on goals for the next fiscal year. In July the company already said it expects non-handset revenue to expand at a pace well above 60%, so the new call is where that claim meets detail.

It also gives readers a full-year view of the segments. Through the first nine months, revenue was almost unchanged from the prior year, which means the fourth quarter will decide whether the year finishes slightly higher or slightly lower. The guidance range, from about $9.7 billion to $10.5 billion, leaves room for either outcome.

The mix inside that total will matter as much as the total itself. A year in which automotive and the Internet of Things carry a larger share, and handsets a smaller one, would look different from the past even if the headline is flat.

What else is on the calendar?

The release will be followed by the company's Annual Report on the standard form later in the year, which will give audited figures, disclosure of uncertainties and more detail about litigation and licensing. A regular quarterly Dividend decision typically comes from the board on its own schedule and would be announced separately.

The wider semiconductor group also has several reports in the coming weeks, and those results can inform how the market reads Qualcomm's numbers. Memory makers and device brands in particular will provide a view of supply and pricing in the markets that matter for handsets.

None of these events changes what has already been disclosed. They simply add context to a report that arrives at a moment when the company is trying to prove that its business can grow beyond phones.