Qualcomm

Qualcomm shares slip as legal battle with Apple continues to plague earnings

Chance Miller | Jul 19 2017 - 2:26 pm PT

Qualcomm’s ongoing legal battle with Apple continues to take a toll on its earnings. The chipmaker today reported its third quarter earnings, beating estimates but showing a sharp decline compared to this time last year due to its case with Apple.

Qualcomm reported earnings per share of 83 cents, versus estimates of 81 cents. Revenue came in at $5.3 billion versus Wall Street expectations of $5.26 billion. During the year-ago quarter, Qualcomm reported $6.04 billion in revenue on earnings per share of $1.16. Needless to say, that’s a pretty drastic percentage drop however you look at it.

Earlier this year, Qualcomm cut its earnings estimates for the third quarter due to its ongoing litigation with Apple. This explains how the company was technically able to beat estimates despite the year-over-year decrease.

In the company’s earnings release, CEO Steve Mollenkopf said that he believes Qualcomm holds “the high ground” in its legal battle with Apple, while also noting that the company has taken new actions to protect the value of its technologies.

“We believe that we hold the high ground with regard to the dispute with Apple, and we have initiated new actions to protect the well-established value of our technologies,” Qualcomm CEO Steve Mollenkopf said in a statement.

Furthermore, Qualcomm cut its financial guidance for the fourth quarter excluding sales of Apple products:

“Our financial guidance for the fourth quarter of fiscal 2017 excludes QTL revenues related to the sale of Apple products by Apple’s contract manufacturers as well as the other licensee in dispute as we expect the recent actions taken by these licensees will continue until the respective disputes are resolved.”

On the earnings release and this morning’s news concerning Apple underwriting legal costs for iPhone manufacturers embroiled in the Qualcomm case, QCOM shares are down around 1.3 percent in after-hours trading.

Earlier this morning, a report explained that four iPhone manufacturers – Foxconn, Pegatron, Winstron, and Compal – all filed antitrust allegations against Qualcomm. Meanwhile, Qualcomm’s Mollenkopf recently stated that he hopes to settle the dispute outside of court, a sentiment echoed by Apple’s Tim Cook earlier this year. Perhaps Qualcomm has realized just how much it relies on Apple and thus is trying to smooth things over despite once accusing the company of blackmail and seeking an import ban on iPhones.

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