Telecom Stock Roundup: Qualcomm, Motorola Trump Earnings Estimates & More
Zacks Investment Research | May 09, 2019 08:34AM ET
In the past five trading days, telecom stocks flattered to deceive as the initial uptrend driven by better-than-expected earnings was replaced by a gradual decline later in the week, triggered by a sudden breakdown in the bilateral trade talks with China. As the equity markets reeled under the likelihood of a fresh tariff regime, telecom stocks mirrored the broader market sentiments with uncertainty creeping in the sector.
Both the United States and China appeared to be close to reaching a sweeping trade deal that would end the skirmishes between the two countries and resolve the nine-month old trade war that disrupted supply chains and weighed on the global economy. However, despite numerous rounds of high-level trade negotiations between the U.S. treasury secretary Steven Mnuchin and Trade Representative Robert Lighthizer with a Chinese delegation led by vice premier Liu He, a consensus decision was not reached.
Although the White House had then qualified the talks as encouraging and ‘making good headway’, China reportedly backtracked on most of the thorny issues and the trade talks fell flat. With no imminent breakthrough evident, the Trump administration is set to increase tariff on $200 billion worth of Chinese imports from 10% to 25%. Additional tariffs on $325 billion worth of imports from the Communist nation are also on the anvil. This is likely to trigger retaliatory tariffs from China as well, increasing tensions between the superpowers.
Meanwhile, the U.S. government continued to up the ante against Chinese telecom firms as a senior official claimed that no executive order from Trump is necessary to explicitly ban Huawei from developing 5G networks across the country. He further backed the claim through support from the leading U.S. telecom service providers as they vouched to shun Huawei from their 5G build-out plans. The Federal Communications Commission is also slated to vote on an order to prevent China Mobile USA, a subsidiary of China Mobile, from providing telecommunications services in the United States.
Regarding company-specific news, quarterly earnings primarily took the center stage over the past five trading days.
Recap of the Week’s Most Important Stories
1. Qualcomm Incorporated (NASDAQ:QCOM) reported solid second-quarter fiscal 2019 results with the top and bottom line beating the respective Zacks Consensus Estimate. The chip maker’s financial performance was driven by strength in both the operating segments owing to strong product leadership and operating expense management.
Quarterly non-GAAP net income came in at $932 million or 77 cents per share compared with $1,154 million or 78 cents per share in the year-ago quarter. Non-GAAP earnings per share for the reported quarter exceeded the guidance of the company and comfortably beat the Zacks Consensus Estimate by 6 cents. Non-GAAP revenues came in at $4,884 million compared with $5,190 million in the year-ago quarter, surpassing the consensus estimate of $4,805 million. (Read more: Original post
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