CNBC reported on Wednesday, 28th January, 2015 that although Qualcomm Inc (NASDAQ:QCOM) had beaten Wall Street’s expectations in terms of its earnings report, the stock still plunged by 8% by the time trading session came to an end. A weak second-quarter forecast which the company projected at its release triggered heavy volume trading and eventually shares closed at $65.44.
While Qualcomm Inc (NASDAQ:QCOM)’s chips have been a popular choice for mobile companies the world over, the blow was delivered when one of its largest buyer namely Samsung decided to shift to a different brand for its Galaxy range of mobile phones. Galaxy being a flagship of Samsung, it will not be fitted with Snapdragon 810 processor which Qualcomm has recently released. The explanation provided is that the latest chip was found to be prone to getting over-heated during trials and that is why Samsung decided to replace it with one of its own creation, namely Exynos CPU.
Another setback for Qualcomm Inc (NASDAQ:QCOM) was that its sales in China have been hampered by an antitrust investigation and figures have fallen short of expectations. Having sorted out the licensing issue in China, Qualcomm’s Chief Executive Steve Mollenkopf said –
“We have already addressed many of the initial product challenges in order to support early customer device launches in these tiers and are continuing to further enhance the performance of this chip.”
On one hand, Qualcomm’s head continued to offer the reassurance that Snapdragon 810 was being used in as many as 60 devices, Stacy Rasgon, an analyst with Bernstein observed –
“Qualcomm has a lot of market share but they have some customers with scale to do their own silicon, and it looks like that’s happening. This may be a trend.”
With the results of the NDRC investigation in China still to be released and the US Dollar strengthening, future for chip-maker Qualcomm (NASDAQ:QCOM) looks weak. Therefore, investors might as well take whatever profits they can and exit the stock before it plunges even further.
This article has been written by Vinita Basu.