Source: Qualcomm.

Shares of semiconductor designer Qualcomm (NASDAQ:QCOM) reported first-quarter results after the closing bell on Wednesday. When the news hit the wires, Qualcomm shares immediately plunged 5% lower on lowered full-year guidance.

Qualcomm's sales rose 7% year over year in the first quarter, landing at $7.1 billion. Diluted non-GAAP earnings almost followed suit with a 6% increase to $1.34 per share. Analysts had been looking for earnings of $1.25 per share on roughly $6.9 billion in sales, so Qualcomm beat expectations on both counts.

For the second quarter, Qualcomm's guidance ranges centered on adjusted earnings of $1.34 per share on $6.8 billion in total sales. So far, so good -- these figures would beat the current Street view of the upcoming quarter.

But the further forward view wasn't as impressive as the scene in Qualcomm's rearview mirror.

The existing revenue guidance for the full year was adjusted downward by $0.8 billion, dragging earnings projections down by $0.30 per share. The new full-year forecasts point to revenues of roughly $27 billion and $4.90 in adjusted earnings per share. Here, analysts had been aligning their estimates with Qualcomm's prior guidance, well below the new forecasts.

So what's wrong with Qualcomm's estimated prospects in the second half of this fiscal year? Management pointed to two main problems:

  • Market shares for central processors in premium smartphones are shifting, according to Qualcomm. In particular, one unnamed but "large" smartphone customer will not build its next flagship device around Qualcomm's Snapdragon 810 chip, as previously expected.
  • Qualcomm sees "significant opportunities" in the market for wireless communications chips in China, but these opportunities have been hampered by alleged under-reporting of licensed device sales. Moreover, Qualcomm's business practices are under review by Chinese authorities, putting another damper on that market's real-world value.

Qualcomm declined to name the large smartphone designer that's going with a different central processor, but it's really not a big mystery. The rumor mill has already been indicating that Samsung (OTC:SSNLF) might use its own Exynos chips instead of Snapdragons in the upcoming Galaxy S6 handset, and Qualcomm's timid disclosure just adds more fuel to that fire.

It's also possible that any of the other major Android smartphone players could have gone with an NVIDIA (NASDAQ:NVDA) Tegra processor or even a Texas Instruments (NASDAQ:TXN) OMPA in place of a high-end Snapdragon, but a few simple facts should point investors back at the Samsung explanation.

For one, Samsung itself is much more likely to use the Exynos chip series it developed in-house and tested out in certain Galaxy models along the way, rather than ordering up millions of less familiar chips from another competitor. So if Samsung is the culprit, don't expect NVIDIA or TI to report smartphone market gains at Qualcomm's expense.

Furthermore, Texas Instruments already reported results and didn't talk about any large smartphone design wins. NVIDIA won't report for another couple of weeks, but this company is no stranger to pre-earnings information leaks. The rumor-mongers are coming up dry on this one.

So again, Qualcomm is most likely pointing a finger at Samsung, which in turn is simply turning to internal chip sources for its next Galaxy-series smartphone. Those are the breaks near the top of the food chain.

Following this after-hours drop, Qualcomm shares can be bought for just 15.4 times normalized earnings. That's a multi-year low, and a bargain compared with close rivals such as Texas Instruments and NVIDIA.

The question investors must ask is simple: Does Qualcomm deserve a trip to the bargain bin, or are investors overreacting to this disappointing full-year forecast? That's a judgment call that only you can make, but the Fool can help you get that homework done. Add Qualcomm to your Foolish watchlist if you want to dive deeper into the company's prospects.