Is a legal dispute with Apple costing chip maker Qualcomm?


On an adjusted basis, Qualcomm reported revenue of $5.99 billion, beating analysts' average estimate of $5.89 billion. For the GAAP results, that equates to a 10 percent decrease year over year from 2016 for the revenue which was $5.6 Billion.

The ramifications of this fight dominated Qualcomm's earnings release and call, in which Qualcomm admitted that contract manufacturers underpaid royalty payments in the fiscal second quarter to the tune of about $1 billion.

That is below consensus for $5.9 billion and $1.09 per share. Qualcomm posted adjusted earnings of $1.34 per share on $6 billion in adjusted revenue. Segment operating income rose 179% to $475 million.

For the first half of the company's fiscal year, net income was $1.4 billion, or 96 cents per diluted share, compared to $2.66 billion, or $1.77 per diluted share, in the first six months of last year.

Total reported sales of licensed devices increased by 18% year over year to $82.6 billion. Its QTL revenues increased 5% from $2.14 billion to $2.25 billion.

Shares closed at $52.61 Wednesday, down 0.1% for the day.

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Qualcomm Inc, the largest maker of chips used in smartphones, reported 9.6 percent fall in quarterly revenue, hurt by an arbitration decision to pay Canada's BlackBerry Ltd for previously received royalties. Apple is now suing Qualcomm for charging excessive royalties and withholding payments.

While the lack of payments in the quarter was effectively canceled out by the money Qualcomm has withheld Apple in rebate payments, Qualcomm executives said they could not predict whether or not they will be underpaid again in the current quarter, leading to wider-than-normal earnings guidance.

"We delivered strong results this quarter, with healthy year-over-year growth across our QTL licensing and QCT semiconductor businesses, especially in the important automotive, networking and IoT growth areas", CEO Steve Mollenkopf said in a statement. However, our revenues were not negatively impacted as the contract manufacturers acknowledged the amounts are due and the underpayment was equal to the amounts that Qualcomm has not paid Apple under our Cooperation Agreement that are now in dispute.

During today's earnings call, Qualcomm took the time to address each its legal battles directly, and company President Derek Aberle once again refuted the claims made by the FTC and Apple.

Shares of Qualcomm ticked higher in extended trading, climbing by as much as 1.69% to $53.50 following tonight's report.