Qualcomm again blames Apple as stock slides following weak holiday season forecast

Following a report this morning claiming Apple is preparing for a trial with Qualcomm, the chipmaker this evening offered its earnings guidance for the holiday quarter of this year. While Qualcomm is forecasting higher-than-expected earnings-per-share, that’s only due to a one-time tax benefit.

As reported by Reuters, Qualcomm’s fiscal first quarter forecast consists of revenue between $4.5 billion and $5.3 billion, as well as adjusted earnings between $1.05 and $1.15 per share. Analysts were expecting revenue of $5.57 billion and EPS of $0.95.

The higher-than-expected EPS is due to a one-time tax benefit of about 45 cents per share, Reuters says. Thus, without that adjustment, Qualcomm’s EPS would have been significantly lower than Wall Street expectations.

Speaking to Reuters, Qualcomm’s chief financial officer George Davis said that “about half” of chip purchases from Apple tend to come during the holiday quarter. The guidance for Q1 2019 includes a reduction of 50 million chip orders, he added:

“Our guidance has a reduction of over 50 million (chip) units in the quarter, all of that explained by the absence of being in Apple phones,” Davis told Reuters. “That’s really the difference.”

Qualcomm shares are down over 4 percent following the earnings forecast. Davis postulates that investors might have expected the loss of Apple’s business to be more spread out over the full year, rather than such a big one-time hit.

Earlier today, a report said that Apple has “no plans to reach a settlement” with Qualcomm in the ongoing litigation between the two, and is instead gearing up for trial. This comes after Qualcomm’s CEO optimistically stated that he thinks Apple will eventually become a chip customer again.

The iPhone XS, iPhone XS Max, and iPhone XR all ditch Qualcomm chips for Intel. Further, a report last week suggested that Apple is working with Intel on 5G technology for the iPhone, which deals yet another blow to Qualcomm.

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