Qualcomm slumps as investors hang up on mobile phone chipmaker
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Qualcomm (NASDAQ:QCOM) shares gave up almost 8% Thursday as Wall Street showed its disappointment with the communications chipmaker's outlook and comments about rising product inventories.
Late Wednesday, Qualcomm (QCOM) said it believes it will earn $2.25 to $2.45 a share, excluding one-time items, on revenue in a range of $9.2B to $10B for its fiscal first quarter that ends in December. The company said its business was being impacted by factors such as "the rapid deterioration in demand and easing of supply constraints across the semiconductor industry" that are resulting in rising product inventory levels.
As such, Qualcomm (QCOM) said it expects its mobile-phone handset business to fall In "a low double-digit percentage range" this year from last year. The company had earlier forecast a "mid-single-digit percentage decline" from 2021.
Morgan Stanley analyst Joseph Moore said that Thursday's stock selloff "speaks to investor concerns about [Qualcomm's] near-term numbers," as the size of the expected handset shortfall "was much more severe than our expectations." 
However, Moore added that Qualcomm's (QCOM) upcoming handset outlook "is in some ways a positive, as the company chooses decisive actions to draw down inventory instead of smaller lingering cuts."
Moore maintained his in-line rating on Qualcomm's (QCOM), but cut his price target to $126 a share from $147.
A potential bright spot for Qualcomm (QCOM) could come from Apple (AAPL), as Qualcomm said it expects to have "the vast majority of share" of 5G modems for the next iPhone line that comes out in 2023. Qualcomm (QCOM) had earlier said it expected to have about a 20% of the iPhone's modem business as the company is working to diversify into other areas such as semiconductors for autos and self-driving technology.
Along with its outlook, Qualcomm (QCOM) also reported fourth-quarter results that included sales just exceeding analysts' forecasts.