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Earnings

Qualcomm earnings: A 5G chip on its shoulder

​Qualcomm logo
Qualcomm
  • Q2 revenue: $5.2 billion (+7% YoY, +2% QoQ, vs. $5.02 billion expected)
  • Q2 earnings: $468 million (-29% YoY, -49% QoQ, below expectations)
  • Q3 guidance: Between $4.4 billion and $5.2 billion in revenue

The big number: Even with the pandemic raging, Qualcomm managed to beat revenue expectations. It generated nearly $200 million more revenue than analysts expected for the quarter, suggesting that many people adapted to work-from-home life by buying a new gadget or two before lockdown took effect. And that's even with a roughly 21% shortfall in demand for new smartphones over what Qualcomm had expected in the quarter.

People are talking: "The sudden and dramatic change in how we're living today has impacted nearly every citizen on the planet," CEO Steve Mollenkopf said on a call with analysts. "The global stay-at-home orders highlight the critical role that broadband has played in facilitating remote workforce, distance learning, entertainment, telemedicine, communication and many other things."

Opportunities: Even with everyone cooped up at home — or maybe because of it — Qualcomm is relatively bullish about its prospects for chip sales in the coming months, especially for new devices like 5G phones. The company said that 5G network deployments were "progressing mostly as planned." "We continue to be well-positioned to drive the rapid adoption of 5G globally," it added.

Qualcomm said it expects an increase in chip revenue between 1% and 18% for the coming quarter. It released new chipsets earlier in the year, and given that so many people have shifted to working from home, it's perhaps unsurprising that people would want new laptops, tablets and phones with Wi-Fi and cellular modems in them. It would definitely help Qualcomm's bottom line the longer much of the West continues to be stuck at home.

Threats: Just like everyone else, Qualcomm is still expecting things to be rough next quarter. "Given the uncertainty caused by the COVID-19 pandemic, including the timing and pace of economic recovery, our guidance for the third quarter of fiscal 2020 is based on a planning assumption that there will be an approximate 30% reduction in handset shipments relative to our prior expectations," the company said.

Qualcomm's second-largest business, licensing out its patents and designs, looks like it's also going to be soft next quarter. The company is forecasting between $750 million and $950 million for its third fiscal quarter, a drop from the $1.1 billion the segment posted this quarter. With so many under quarantine, it's no surprise that R&D at other companies is likely to slow. The company said it expects a 42% drop in licensing revenue for the quarter when compared to the same period a year ago.

The power struggle: When it last reported earnings, Qualcomm estimated it would ship between 175 million and 225 million chips for 5G smartphones in 2020, out of about 1.75 billion to 1.85 billion total smartphone shipments overall. This time, Qualcomm hasn't changed its stance on its 5G estimate, but interestingly declined to provide specific guidance for a total smartphone shipment estimate. 5G is certainly the future of the telecom industry, but when it comes to sales, it's not really the present.

Correction: an earlier version of this story miscalculated the drop in Qualcomm's net income. This story was updated April 30, 2020.

Microsoft wants to replace artists with AI

Better Zoom calls, simpler email attachments, smart iPhone cases and other patents from Big Tech.

Turning your stories into images.

Image: USPTO/Microsoft

Hello and welcome to 2021! The Big Tech patent roundup is back, after a short vacation and … all the things … that happened between the start of the year and now. It seems the tradition of tech companies filing weird and wonderful patents has carried into the new year; there are some real gems from the last few weeks. Microsoft is trying to outsource all creative endeavors to AI; Apple wants to make seat belts less annoying; and Amazon wants to cut down on some of the recyclable waste that its own success has inevitably created.

And remember: The big tech companies file all kinds of crazy patents for things, and though most never amount to anything, some end up defining the future.

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Mike Murphy

Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.

Power

Sonos CEO Patrick Spence: There’s money in ad sales for us

The smart speaker maker adds in-house ad sales as radio service continues to grow.

"Given the kind of customer base that we have and given the adoption we've seen in Sonos Radio, there's absolutely advertising revenue there," Patrick Spence says.

Photo: Andrej Sokolow/Picture Alliance via Getty Images

Sonos is doubling down on its efforts to monetize services on its platform, and is now looking to build out an in-house ad sales team for its free Sonos Radio service. Sonos CEO Patrick Spence confirmed the news in a conversation with Protocol on Wednesday, saying that in-house ad sales could help the company attract the right kind of brand advertisers to its platform. "Given the kind of customer base that we have and given the adoption we've seen in Sonos Radio, there's absolutely advertising revenue there," he said.

Spence made these remarks ahead of the release of the company's fiscal Q4 2020 earnings results. The company grew its revenue 16% year-over-year, to the tune of $339.8 million for the quarter. Earnings per share came in at $0.15, ahead of the $0.02 that analysts had expected. The company added 1.8 million new households to its customer base in its fiscal 2020, and close to 11 million households now own Sonos products, with an average of 2.9 Sonos products in each of those households.

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Janko Roettgers (@jank0) is a senior reporter at Protocol, reporting on the shifting power dynamics between tech, media, and entertainment, including the impact of new technologies. Previously, Janko was Variety's first-ever technology writer in San Francisco, where he covered big tech and emerging technologies. He has reported for Gigaom, Frankfurter Rundschau, Berliner Zeitung, and ORF, among others. He has written three books on consumer cord-cutting and online music and co-edited an anthology on internet subcultures. He lives with his family in Oakland.

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Investors didn’t like Ubisoft and Activision’s earnings

Both stocks plunged on the companies' forecasts.

The outlook is good for console manufacturers, but not so much on the software side.

Image: Protocol

Big Tech companies weren't the only ones reporting earnings this week; some of the biggest players in the gaming industry were, too. And there was a sharp divide: While the outlook's good for console manufacturers, things are less peachy on the software side.

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Despite an early-week scare, cloud earnings finish strong

SAP's disappointing results had investors worried that a weak economy had finally caught up with the titans of enterprise tech, but AWS, Microsoft and Google are still going strong.

All three major vendors reported strong revenue growth this week.

Image: Protocol and Gonza

At a moment of great uncertainty for the world economy, with a new wave of the pandemic looming and one of the most consequential U.S. elections in decades around the corner, it's still a pretty good time to be in the cloud computing business.

AWS, Microsoft and Google all continued to benefit from the generational shift away from self-managed data centers to at least some degree of cloud computing during the third quarter of 2020. All three major vendors reported strong revenue growth this week but appear to be very closely watching an unsteady economy that could be forced into lockdown once again this winter.

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People

After discontinuing free trials, Netflix plans StreamFest promotion

The streaming service is looking to first test a free weekend in India.

Anyone who wants to keep watching after the conclusion of the two-day event will have to sign up for a regular account.

Photo: Thibault Penin

Netflix is looking to promote its service with a 48-hour free streaming event, confirmed COO Greg Peters during the company's Q3 2020 earnings call Tuesday afternoon. Netflix is looking to first test the free streaming offer in India, and may bring it to other countries in the following months.

"We think that giving everyone in a country access to Netflix for free for a weekend could be a great way to expose a bunch of new people to the amazing stories that we have," Peters said. "Really creating an event, and hopefully get a bunch of those folks to sign up."

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Janko Roettgers

Janko Roettgers (@jank0) is a senior reporter at Protocol, reporting on the shifting power dynamics between tech, media, and entertainment, including the impact of new technologies. Previously, Janko was Variety's first-ever technology writer in San Francisco, where he covered big tech and emerging technologies. He has reported for Gigaom, Frankfurter Rundschau, Berliner Zeitung, and ORF, among others. He has written three books on consumer cord-cutting and online music and co-edited an anthology on internet subcultures. He lives with his family in Oakland.

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