Qualcomm (NASDAQ:QCOM) Incorporated (NASDAQ:QCOM), a leading provider of wireless technology and services, reported a significant downturn in its fiscal 2023 performance due to macroeconomic pressures. The company saw its fourth-quarter revenue decrease by 24% year-over-year (YoY) to $8.7 billion and earnings per share (EPS) drop by 35% to $2.02. Across the full fiscal year, Qualcomm's revenue and earnings experienced declines of 19% and 33%, respectively.
The company's Qualcomm CDMA Technologies (QCT) segment, which is predominantly responsible for chip sales, contributed to 85% of the total annual revenue. Despite the overall decline, the Automotive chip sales stood out with a notable 24% increase. However, handset and Internet of Things (IoT) chip sales did not perform as well, falling by 22% and 19.2%, respectively.
Despite these challenges, Qualcomm maintained a strong financial position at the end of fiscal 2023, with $11.3 billion in cash and equivalents. The company also generated $9.8 billion in free cash flow, which was allocated to dividends with a yield of 2.6% and share repurchases.
Looking ahead to fiscal 2024, Qualcomm is optimistic about prospects for growth, bolstered by an expected recovery in the global smartphone market projected at a 4.5% YoY increase. This anticipation of market rebound is underpinned by the company's recent product launches, including the Snapdragon 8 Gen 3 for smartphones, Snapdragon X Elite for PCs, and AI-powered S7 and S7 Pro Gen 1 sound platforms.
Additionally, Qualcomm has secured significant deals that are likely to contribute to its future growth trajectory. Notably, the company has announced agreements with Apple (NASDAQ:AAPL) to supply Snapdragon 5G Modem-RF Systems from 2024 through 2026 and partnerships with Amazon’s AWS.
For the first quarter of fiscal 2024, Qualcomm projects its revenue to be in the range of $9.1 billion to $9.9 billion, with EPS estimated between $2.25 and $2.45. Analysts from TD Cowen, DZ Bank, and JPMorgan (NYSE:JPM) have expressed confidence in Qualcomm's stock potential, recommending a Buy rating with an average price target of $135.83. They predict YoY growth rates for revenue and earnings in fiscal 2024 to be around 5.5% and 9.3%, respectively.
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