Qualcomm Performance Slumps 23%, Bill Ackman Bets Against US Bonds, Leptospirosis Outbreak in Philippines
After the U.S. stock market closed on August 2 local time, the U.S. chip giant Qualcomm disclosed its third fiscal quarter report for fiscal year 2023 ending on June 25. During the reporting period, it achieved revenue of US$8.45 billion, a year-on-year decrease of 23%; billion, a sharp drop of 52% year-on-year. Affected by this, Qualcomm’s stock price fell by more than 11% overnight in the U.S. stock market, the largest intraday drop since February 2021. The latest total market value has shrunk to 132.4 billion US dollars (about 946.6 billion yuan).
Currently, Bill Ackman, a Wall Street tycoon and founder of American hedge fund Pershing Square, is aggressively shorting 30-year U.S. Treasury bonds. He believes it’s one of the few macro investments that “still offers fairly asymmetric returns” right now. The “U.S. debt tsunami” is approaching. On August 3, local time, long-term U.S. bonds fell sharply. The yield of the 10-year U.S. Treasury bond, known as the “anchor of global asset pricing”, rose by at least 10 percent for the third consecutive day. basis points, and the 30-year U.S. bond yield hit new highs since November 2022.
What deserves vigilance is the sudden outbreak of acute infectious diseases in the Philippines. On August 3, local time, the Philippine Department of Health reported that since the beginning of this year, cases of leptospirosis (“leptospirosis” for short) have been reported in many places in the country, and the number of confirmed cases is on the rise, causing at least 225 deaths. In Metro Manila, the number of confirmed cases has been on the rise in the past month.
The chip giant exploded
After the U.S. stock market closed on August 2 local time, the U.S. chip giant Qualcomm disclosed its fiscal third-quarter report for fiscal year 2023 ending on June 25. During the reporting period, it achieved revenue of $8.45 billion, a year-on-year decrease of 23%, lower than the analysis. Analysts expected; net profit of 1.8 billion US dollars, a sharp drop of 52% year-on-year.
If based on non-GAAP, during the reporting period, Qualcomm achieved revenue of US$8.44 billion, a year-on-year decrease of 23%; net profit of US$2.11 billion, a year-on-year decrease of 37%.
Qualcomm’s main business consists of two major sectors, the semiconductor business (QCT) based on chip products and the technology licensing business (QTL) based on intellectual property licensing.
In the third fiscal quarter of fiscal year 2023, Qualcomm’s QCT business revenue was US$7.174 billion, a year-on-year decrease of 24%, and pre-tax profit was US$1.744 billion, a year-on-year decrease of 42%; Qualcomm’s QTL business revenue was US$1.23 billion, a year-on-year decrease of 19%. Profit before tax was US$810 million, a year-on-year decrease of 25%.
Looking ahead to the fourth fiscal quarter, Qualcomm expects the company’s revenue to be between $8.1 billion and $8.9 billion. Based on non-GAAP, Qualcomm expects earnings per share of $1.8-2 in the fourth quarter. The median of the above expected ranges were all lower than market expectations.
Affected by the lower-than-expected performance, Qualcomm’s stock price opened sharply lower by 10% after the U.S. stock market opened on August 3, local time. At one point, it fell by more than 11%, the largest intraday drop since February 2021. The latest total market value has shrunk to 1324. billion U.S. dollars (approximately RMB 946.6 billion).
It is worth mentioning that on the eve of the thunderstorm, market funds frantically sought after Qualcomm. Since May this year, Qualcomm’s share price has risen by a maximum of 32%. Therefore, the latest performance disclosed by Qualcomm surprised the market.
The main reason for the decline in Qualcomm’s performance is that global smartphone shipments continue to decline, resulting in a sharp decline in revenue from its core business of mobile phone chips.
Qualcomm CFO Akash Palkhiwala (Akash Palkhiwala) said on the earnings conference call that the timing of the continued recovery of mobile phones is still difficult to predict, and customers are still cautious about buying.
Talking about the Chinese customer Huawei, Akash Parshiwala said that in the forecast for the next two quarters, it is not assumed that there will be a large amount of Huawei-related revenue. Qualcomm currently has a license to supply 4G chips to Huawei, but it does not have a license to supply 5G chips, and it is still unable to supply 5G chips to Huawei.
Under the cold winter, Qualcomm is laying off a large number of employees. According to the “San Diego Union Tribune” report, in June this year, Qualcomm laid off 415 people at its San Diego headquarters. According to its disclosed financial report, in the first three quarters of fiscal 2023, Qualcomm incurred adjustment-related expenses of US$285 million, most of which were employee severance expenses.
Qualcomm CEO Cristiano Amon revealed in a conference call that he still has a conservative view of the market and is making plans, mainly including layoffs, and is expected to generate a lot of additional restructuring costs.
aggressively short
Currently, Bill Ackman, a Wall Street tycoon and founder of American hedge fund Pershing Square, is aggressively shorting 30-year U.S. Treasury bonds.
On August 3, local time, Ackerman posted on social platforms that he believed the short sale was a “high probability” independent bet.
It should be pointed out that Ackman made a bearish bet through options, not directly shorting bonds. He believes it’s one of the few macro investments that “still offers fairly asymmetric returns” right now.
On the eve of Ackman’s short-selling announcement, the international rating giant Fitch announced that it would downgrade the long-term foreign currency debt rating of the United States from AAA to AA+, which directly aroused strong opposition from the White House of the United States and once caused a huge shock in the global market.
Ackman said the U.S. needs an increase in Treasury supply to fund the current budget deficit, future spending plans and higher refinancing rates. Long-dated bonds look “overbought” from a supply and demand standpoint, and it’s hard to see how the market will respond to increased bond issuance “without significantly raising interest rates.”
On August 2 local time, the U.S. Treasury Department raised the issuance of longer-dated bonds in its quarterly refinancing operation for the first time since early 2021, by $7 billion to $103 billion from $96 billion, beating traders’ consensus forecast of 1020. One hundred million U.S. dollars.
Looking ahead, the U.S. Treasury said further gradual increases in debt issuance may be needed in the coming quarters. The net borrowing forecast for the third quarter is expected to be raised to $1 trillion.
Ackman said that if the long-term inflation rate remains at 3% instead of 2%, the 30-year Treasury yield may reach 5.5%. new high since.
Ackman emphasized that this appears to be one of the many times in history when the bond market has repriced long-dated bonds within a few weeks.
It is worth mentioning that due to strong liquidity, the 10-year U.S. bond yield is known as the “anchor of global asset pricing”, and its surge often causes violent turmoil in the financial market and further increases the possibility of recession.
Acute infectious disease outbreak in the Philippines
On August 3, local time, the Philippine Ministry of Health reported that many places in the country have reported cases of leptospirosis (“leptospirosis”) since the beginning of this year. The number of confirmed cases is on the rise and has caused at least 225 deaths.
The Philippine Ministry of Health said in the report that from the beginning of the year to July 15, at least 10 regions have reported a total of 2,079 cases of leptospirosis. In Metro Manila, the number of confirmed cases has been on the rise in the past month.
Leptospirosis is an acute infectious disease caused by pathogenic Leptospira. It is a zoonotic disease and is easy to spread in areas with poor sanitation, flooding and contaminated drinking water. Rodents, pigs and other livestock are the main sources of infection for leptospirosis. Typical symptoms of patients include body aches, fatigue, high fever, and severe symptoms may be complicated by pulmonary hemorrhage, encephalitis, and renal failure.
The Philippine Department of Health warned that due to typhoons and monsoons, several areas in the Philippines have experienced continuous torrential rains in recent days, resulting in floods and waterlogging in many areas, which may accelerate the spread of leptospirosis.
