Steve Mollenkopf, Chief Executive Officer (CEO) of Qualcomm is more cautious on future revenue growth recently. Mobile chipmaker Qualcomm Inc has taken a more conservative five year outlook than it has in the past. This could be due to the fact that it faces an antitrust probe in China and there are more consumers there and in other developing countries buying lower priced smart devices. China has an expanding high speed 4G network that is driving demand for smart devices, particularly smartphones with cutting edge technology. However Qualcomm has found its opportunities dashed by a one year old antitrust investigation there, which makes it difficult to collect royalty payments from the device manufacturers.
Qualcomm is expected to grow its revenue between eight and ten percent annual over the next five years and its earning per share by even more. CEO Steve Mollenkopf said at the company’s annual investor day that Qualcomm’s issues in China were creating problems with its royalty business, known as QTL, which provides most of Qualcomm’s revenue. In fact, Qualcomm’s overall revenue grew 6.5 percent in fiscal 2014, which was far below the growth rates of approximately 30 percent in previous recent years. Analyst expect five percent revenue growth of 2015. “On QTL the short story is that the underlying market continues to grow,” said Mollenkopf, “We are not participating in it right now to the degree we would like to, but once we resolve China we think we’ll continue to grow in that area.” He also stated that Qualcomm is developing low-power chips for data centers, which is currently a market dominated by Intel.
Qualcomm also reported that its fifth-generation LTE modem chip, with improved upload and download speeds, was being trialed by customers to be commercially available next year. Qualcomm is a company that has always tried to be the best when it comes to processors. The company believes the expansion of connectivity solutions to include the fifth-generation LTE technology will allow customers more efficient mobile device connectivity with the fastest LTE Advanced networks without consuming a great amount of power. Looking forward to seeing how everything goes, fingers crossed for Qualcomm.