Qualcomm (QCOM) CEO Cristiano Amon said Thursday the chipmaker is prioritizing cutting down costs, one day after announcing a hiring freeze. Shares of Club holding Qualcomm fell 7.66% on Thursday to a new 52-week low of $101.93 each, one day after the company’s fiscal fourth-quarter results met expectations. As we said in our earnings analysis Wednesday evening, there’s little reason to buy more shares right now, given the inventory glut that led to materially lower forward guidance. Looking to reassure shareholders, Amon told Jim Cramer in an interview, “We’re only investing in autos and IoT [internet of things]. That’s our growth story.” Management sees automotive as a total addressable market of $100 billion by 2030. Amon also emphasized “good generation of free cash flow, especially for our licensing business,” following CFO Akash Palkhiwala saying on Wednesday’s post-earnings call that Qualcomm returned “93% of our free cash flow” to shareholders in fiscal 2022, including $3.2 billion in dividends and $3.1 billion in repurchases. On the cost side, Amon said the company is proactively “reducing expenses in mature businesses, adding that the company is “prepared to do more if the situation [deteriorates].” On Wednesday’s call, he said Qualcomm has implemented a hiring freeze. Amon told Jim that while macro headwinds are out of Qualcomm’s control, the inventory correction is cyclical and likely to last just one to two quarters. Management estimated about 8 to 10 weeks of elevated inventory in the channel. “You can’t be selling last year’s phone forever. Those things have cycled. New models come in the design activity that we have right now for premium tiers,” he said. “The launches are going to come throughout the year. Those are new products. We’re going to have to clear this inventory, and you go back to the cycle.” Amon added that 5G auctions in Brazil and India, as well as the latter’s Digital India program designed to improve the country’s online infrastructure, could help Qualcomm offload inventory. “People need new phones, and they’re going to buy new phones,” Amon said. Earlier on Thursday, we exited another chipmaker, Marvell Technology (MRVL), further cutting our exposure to the troubled semiconductor industry and raising our cash levels in case of a further market downturn. For now, we’re not selling any more of our other two chip holdings Advanced Micro Devices (AMD) and Nvidia (NVDA). (Jim Cramer’s Charitable Trust is long QCOM, AMD and NVDA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Cristiano Amon, president of Qualcomm and Qualcomm CDMA Technologies, responds to a question during a panel discussion on 5G wireless broadband technology during the 2018 CES in Las Vegas, Nevada, U.S. January 10, 2018.
Steve Marcus | Reuters
Qualcomm (QCOM) CEO Cristiano Amon said Thursday the chipmaker is prioritizing cutting down costs, one day after announcing a hiring freeze.
