Will Qualcomm (QCOM) Disappoint Investors in Q3 Earnings?

Qualcomm Inc. QCOM , the largest manufacturer of wireless chipsets based on baseband technology, is scheduled to report third-quarter fiscal 2017 numbers on Jul 19, after market closes.

Last quarter, Qualcomm delivered a positive earnings surprise of 14.29%. The company’s earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters, with an average beat of 14.45%.

However, shares of Qualcomm have underperformed the Zacks classified Wireless Equipment industry’s growth over the past three months. The stock inched up 7.86% but failed to beat the industry’s growth of 9.80%.

Let’s see how things are shaping up for this announcement.

Factors at Play

Qualcomm has been facing regulatory proceedings of late. The company continues to receive charges due to unfair business practices and licensing royalty payments. Qualcomm settled a licensing dispute with BlackBerry Limited BBRY by paying $940 million on May 31. Meanwhile, the ongoing $1-billion lawsuit dispute with tech giant Apple Inc. AAPL is getting bitter by the day, affecting the company’s margins.

Aggressive competition in the mobile phone chipset market has been hurting Qualcomm’s profits. The company faces competitive threats from its closest rival, Intel Corporation INTC . Intel has been redesigning its chipsets for the mobile computing market. We wait to see if it dents Qualcomm’s sales in the fiscal second quarter.

Qualcomm’s updated Snapdragon processors and applications look impressive and will aid the company to retain leadership in the global wireless baseband chipset market. Patent license network deals, tie-up with AT&T Inc. (T) and Ericsson for 5G network trials and the launch of China’s first end-to-end data call bode well for Qualcomm’s growth prospects.

Moreover, the company’s foray into areas like automotive, networking and mobile computing are favorable for its growth prospects. We expect such strategic business…

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