Qualcomm has named a new finance chief as the chipmaker aims to turn around a prolonged sales slump as 5G technology appears poised to revive the smartphone market.
Akash Palkhiwala steps in as chief financial officer, the company reveals in Security and Exchange Commission filings. Palkhiwala, 44, has served as interim CFO since August, when Dave Wise, a 23-year veteran of the company, retired. Palkhiwala previously held the position of treasurer, among other post.
He will receive an annual base salary of $750,000. A call seeking comment from the company was not returned.
Qualcomm, a leading supplier of smartphone components, has been hurt by lackluster phone sales. Worldwide smartphone shipments climbed an anemic 0.8% in the third quarter, reversing seven quarters of declines, according to the International Data Corporation, a research firm. The market it sells to is fiercely competitive and includes global giants Samsung, Huawei and Apple.
Several analysts say Qualcomm is well positioned to benefit from a shift to the fifth generation of cellular networking technology, commonly known as 5G. Last week the company posted a 34% drop in chip shipments in the fourth quarter compared with the same period in 2018, as trade tensions between China and the United States pressured results. Revenue for the period ended in September slipped 17% to $4.8 billion but was better than expected by analysts surveyed by FactSet and near the top of the company’s guidance. Sales have retreated four out of the last five quarters, according to FactSet.
Most analysts noted that some headwinds have subsided. Qualcomm has resumed shipments to Huawei following an earlier ban on US technology to the Chinese company. And in April, Qualcomm settled a legal feud with another major customer, Apple.
The most positive sign, however, is the expected ramping up of demand for 5G technology that company officials forecast during the Qualcomm’s earnings call last week.
According to a transcript, Qualcomm officials expect 5G to launch in all regions within the next two to three years, and they forecast shipments of 5G smartphones of between 175 million and 225 million.
“Qualcomm’s positive outlook, especially in 5G, suggests better smartphone market visibility in 2020,” write analysts at Jefferies. “We think Qualcomm is still the leader in the smartphone market and will of course benefit from the trend.”
Analysts at Dutch research firm Financiele Diensten Amsterdam see the emergence of 5G technology as opening up markets for Qualcomm outside of smartphones. “Qualcomm is optimistic about opportunities in automotive, where it expects a massive adoption of 5G technology,” the analysts write in a research note to clients.