Saturday, 24 February, 2018

Qualcomm profit beats estimates but weak China mobile sales weigh on outlook

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Nellie Chapman | 01 February, 2018, 07:28

Weighed down by the Apple dispute, the licensing business posted a 28 percent fall in revenue to US$1.30 billion in the first quarter ended December 24. Both Samsung and Apple were responsible for more than 10% of Qualcomm revenue in its last fiscal year. "The first quarter of fiscal 2017 results included approximately $740 million in QTL revenues related to the products of Apple and the other licensee in dispute", Qualcomm said.

"The quarter was good even though Apple isn't paying royalties, a testament to the company's diversification", said Patrick Moorhead, analyst from Moor Insights & Strategy.

The results included a $6 billion charge in connection with a repatriation tax in the recently passed USA tax law, a $1.2 billion fine from the European Commission, a $868 million Korea Fair Trade Commission fine, and $778 million Taiwan Fair Trade Commission fine.

Qualcomm also disclosed that it's expanding its cross-license agreement with Samsung over mobile devices and infrastructure equipment.

Qualcomm also said its proposed deal to buy NXP Semiconductors NV for $39 billion should close in early 2018.

Apple, meanwhile, is claiming that Qualcomm charges unfairly high royalties for its patented technologies, and has sued the chipmaker for roughly $1 billion.

Revenue rose 1.2 percent to US$6.07 billion and exceeded analysts' estimates of US$5.93 billion.

Shares of the company were marginally lower in late trade.

In the first quarter, Qualcomm posted a net loss of $5.95 billion due to a $6 billion charge for new US tax laws and a $868 million charge for a fine imposed by the Korea Fair Trade Commission. On an adjusted basis, which takes out the charges, the company brought in 98 cents a share, above the 91 cents analysts polled by Thomson Reuters had expected.

This technology deal with Korea-based Samsung expands the relationship between the two companies as technology and business partners this year and beyond, through the transition to 5G. Its chip unit's revenue grew 13 percent to $4.6 billion, while earnings before tax jumped 32 percent year-over-year to $955 million.