(Reuters) -Qualcomm forecast fourth-quarter revenue below market expectations on Wednesday as consumer spending on gadgets like smartphones remained stubbornly weak amid slowing global economic growth.
Demand for consumer electronics has also been hampered by a slower-than-expected economic recovery in China. Smartphone shipments in the world’s second largest economy were down 5% in the June quarter, according to Canalys data.
Qualcomm said its forecast also takes into account the impact of the macroeconomic headwinds, weaker global handset units and channel inventory drawdown.
The company expects fourth-quarter revenue of $8.1 billion to $8.9 billion. Analysts polled by Refinitiv expected revenue of $8.70 billion.
Its shares were down nearly 2% in choppy trading after the bell
At a conference in May, Qualcomm CEO Cristiano Amon had said he has not seen signs of healthy consumption in China yet and the smartphone industry recovery was “a number of quarters out.”
Qualcomm rival MediaTek last week warned that customers are “cautious” with their purchases due to tepid end-user demand.
Revenue at Qualcomm’s mainstay handset chip business fell 25% to $5.26 billion in the third quarter and adjusted revenue of $8.44 billion missed estimates of $8.50 billion.
It forecast adjusted fourth-quarter earnings per share in the range of $1.80 and $2, compared to estimates of $1.91.
Automotive sector was a bright spot for the company that has been looking to diversify beyond smartphone chips. Revenue from the sector rose 13% on rising electrification of vehicles.
(Reporting by Chavi Mehta in Bengaluru and Stephen Nellis in San Francisco; Editing by Arun Koyyur)
