Qualcomm, led by President and CEO Cristiano Amon, recently reported its third-quarter results which left Wall Street rather surprised. Despite pulling off earnings that surpassed the expectations, the company's revenue and guidance for the fourth quarter did not meet the mark. This led to a fall in Qualcomm's stocks by over 6% during extended trading hours. In this particular quarter ended on June 25th, earnings were $1.87 per share (adjusted), slightly higher than an expected $1.81 per share. However, revenue only reached $8.44 billion (adjusted), falling short of the $8.5 billion predictions.

Qualcomm's projection for the fourth quarter also fell short of consensus expectations. They anticipate earnings between $1.80 and $2 per share with sales ranging from $8.1 billion to $8.9 billion. Meanwhile, Wall Street was expecting earnings of $1.91 on a revenue of $8.7 billion. A significant decline from last year was seen in the net income which dropped to $1.8 billion, or $1.60 per share. This was a dramatic decrease from the $3.73 billion, or $3.29 per share, reported during the same period a year ago.

This decline is partly due to Qualcomm's exposure to the uncertain smartphone industry. The company produces the processors central to most high-end Android devices and various lower-end phones. With falling smartphone shipments expected in 2023, Qualcomm anticipates a "high-single digit percentage" drop in handset units for this year. Yet, Qualcomm predicts growth in the handset industry beginning by this holiday season.

QCT, Qualcomm's largest division which produces processors for smart devices and automobiles reported a 24% slide in sales. Sales reached $7.17 billion, lower than last year's. Handset chip sales, which form the largest part of QCT’s business, fell 25% year over year to $5.26 billion. Despite this decline, the company's automotive business, which sells chips and software for autonomous cars, saw a 13% increase in the quarter's revenue, netting $434 million.

Meanwhile, the profitable licensing business, QTL, saw a decline of 19% in revenue to $1.23 billion. The company is however optimistic about its future, particularly with its plans to capitalize on the industry's focus on the chips required to run software such as OpenAI's ChatGPT. CEO Cristiano Amon cites Qualcomm's ability to run AI models on phones, instead of cloud servers, as a potential "inflection point" that could spur growth. To increase efficiency, the company cut costs by 5% this year and plans to implement further cost-saving measures in the coming times.