Despite beating analysts' expectations and posting positive growth for the last quarter, Qualcomm saw its shares fall by 8 percent after the mobile chipmaker announced it is reducing its guidance for 2015.
Qualcomm's stocks fell by 8 percent to $65.12 in after-hours trading following the company's announcement that it is expecting an annual fiscal revenue of $26 billion to $28 billion, which is down from an earlier estimate of $26.8 billion to $28.8 billion. The company now expects non-GAAP diluted earnings per share of $4.75 to $5.05, down from $5.05 to $5.35.
Following its quarterly earnings call, Quantum released a statement saying the reduced guidance is partly due to expectations that one of its "large customers" will not be using Qualcomm's latest Snapdragon 810 processor in its flagship device. Qualcomm did not name any clients, but the customer it is referring to is widely believed to be Samsung.
Samsung has been the subject of several rumors in the past several weeks over its decision to use its own Exynos mobile processors for the upcoming Samsung Galaxy S6 over the Snapdragon 810 for issues of overheating.
"[The Snapdragon 810] is working as we expect it to work," Qualcomm CEO Steve Mollenkopf said during the conference call. "We're pleased with how it's performing. There is concern really related to one OEM."
Mollenkopf added that the processor will be used in more than 60 devices, including the LG G Flex 2 and Xiaomi Mi Note Pro. The Snapdragon 810 is also believed to power the HTC One M9 once it is announced.
Qualcomm also pointed to a shift in priorities of some of its premium-tier clients as partly the reason for its expected slower growth. The chipmaker is likely referring to Apple, which prefers to use its own processors paired with Qualcomm's modem chip, which are far less profitable than if Apple used its integrated processor and modem chip.
"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," said Stacy Rasgon, analyst at Bernstein. "This may be a trend."
Business in China is also proving to be a bit troublesome for Qualcomm, although it remains to be one of the company's most lucrative markets since China is rapidly expanding its high-speed 4G network. Qualcomm is currently facing an antitrust investigation in the country and, if proven by Chinese regulators to have engaged in monopolistic practices, Qualcomm will have to face a hefty fine or be forced to accept lower royalty payments from its licensees, who pay the chipmaker a certain amount based on their total sales.
"We resolved the previously disclosed dispute with a licensee in China in the first quarter of fiscal 2015," added (pdf) Qualcomm. "However, we continue to believe that certain licensees in China are not fully complying with their contractual obligations to report their sales of licensed products to us and that unlicensed companies may seek to delay execution of new licenses while the NDRC (National Development and Reform Commission) investigation is ongoing."
Half of Qualcomm's revenue comes from China.
