Qualcomm’s (NASDAQ:QCOM) recent earnings report could be categorized as an unexpected misstep, as the San Diego-based semiconductor reported that it beat analysts’ expectations for the quarter but revealed that it had lost a “major customer” for its Snapdragon line of SoCs.
This revelation from executives that a major — and unnamed — customer was defecting to the competition dragged down an otherwise healthy quarter. Qualcomm reported that revenue estimates came in higher than expected $7.1 billion, which represents 7% growth year-over-year, against the $6.94 billion that analysts had projected. Earnings per share hit $1.34 compared analysts’ estimates of $1.25 a share.
However, the company’s outlook going forward is lower than initially expected due to “expectations that our Snapdragon 810 processor will not be in the upcoming design cycle of a large customer’s flagship device.” The possibility that Samsung (KRX: 005930) was ditching Qualcomm’s Snapdragon processor for its home grown Exynos line of chips was the subject of a number of reports and rumors over the past few weeks, and this comment from Qualcomm all but confirms it.
During the earnings call Qualcomm’s CEO was quick to dismiss the idea that Samsung’s decision was because of some inherent flaw in his company’s silicon.
“[The Snapdragon 810] is working as we expect it to work,” said Steve Mollenkopf during the call. “We’re pleased how it’s performing. There is concern really related to one OEM.”