QUALCOMM, Inc. (NASDAQ: QCOM) has reported the adjusted earnings per share of 83 cents in the third quarter of FY 17, while reported the 12 percent fall in the adjusted revenue to $5.3 billion in the third quarter of FY 17. In the same quarter a year ago, QCOM had reported $1.16 per share in earnings on $6 billion in sales.
On the hand, QCOM is facing a new set of antitrust allegations from a group of four companies that assemble the iPhone and other products on behalf of Apple Inc. As a result, the stock fell over 1.7% in the after-hours market session (on July 19th, 2017; Source: Google finance). These four companies Foxconn parent Hon Hai Precision Industry Co, Wistron Corp, Compal Electronics Inc and Pegatron Corp have alleged that QCOM has violated two sections of the Sherman Act, a U.S. antitrust law. The lawsuit was filed in May seeking to force the contractors to pay Qualcomm licence fees that Apple directed them to stop paying. The allegations are part of broader dispute between Apple and Qualcomm, which supplies so-called modem chip technology that lets iPhones connect to cellular data networks, over the nature of Qualcomm’s business model of linking the sale of chips and patent licenses, which has come under scrutiny by regulators in South Korea, the United States and several other countries. Qualcomm is confident that it has the upper hand in its legal battle with Apple, which began with a $1 billion royalty dispute in January. The chip maker expects all these licensees to keep holding back royalty payments until the disputes are resolved.
The company has also shelled out $940 million to BlackBerry in connection with IP licensing due to an arbitration ruling in favor of the Canadian firm. Furthermore, Qualcomm had to pay $927 million in fines to the Korea Free Trade Commission.
Additionally, QCOM has provided guidance for the fourth quarter, which exclude QTL revenues from sales of Apple products by the iPhone maker’s suppliers and the other licensee the company is in dispute with. For the fourth quarter, QCOM expects the revenue to be in the range of $5.4 billion and $6.2 billion, compared to $6.2 billion in last year’s fourth quarter. QCOM expects non-GAAP earnings of 75 cents to 85 cents per share, compared to $1.28 per share last year. Qualcomm expects to ship 205 million to 225 million MSM chips, compared to 211 million in last year’s fourth quarter, and record QTL revenues of $1 billion to $1.3 billion, against $1.9 billion last year.
QCOM stock has risen 7.9% in the last one year (source: Google Finance).