QUALCOMM, Inc. (NASDAQ: QCOM) stock fell over 3.4% on 1st August, 2019 (As of 10:44 am GMT-4; Source: Google finance) after the company’s non-settlement revenue came in below the analysts’ estimates and its outlook stripped out business from China’s Huawei Technologies Co. Qualcomm Inc. is also getting hurt by the U.S.-China trade war.
Meanwhile, Huawei’s effect on Qualcomm’s forecast underscores the extent to which the Chinese company has become more of a rival than a customer to the San Diego-based company. Huawei, which was the subject of U.S. sales restrictions imposed in May, continues to buy a small number of Qualcomm chips.
3d illustration of a glowing blue Qualcomm logo sitting on top of a glossy microchip
But the companies, which are among the world’s largest holders of patents related to 5G technology, are in a protracted licensing dispute. Huawei had been making good-faith payments and negotiations have inched forward, but Mollenkopf said no further payments are included in Qualcomm’s fiscal fourth-quarter guidance.
QCOM in the third quarter of FY 19 has reported the adjusted earnings per share of 80 cents, beating the analysts’ estimates for the adjusted earnings per share of 76 cents, according to the analysts surveyed by FactSet. The company had reported the adjusted revenue of $4.9 billion in the third quarter of FY 19, missing the analysts’ estimates for revenue of $5.09 billion. The company’s modem chip shipments fell 22% to 156 million in the third quarter, missing analysts’ estimate of 160.1 million, according to FactSet.
Apple Inc and Qualcomm had settled all their litigation in April. Apple signed a six-year patent license deal with Qualcomm, as well as a multi-year chip supply agreement. The two have not said when Apple would resume using Qualcomm’s chips in iPhones after dropping them in favor of Intel Corp’s chips for 2018 iPhone models.
Qualcomm expects adjusted fiscal fourth-quarter earnings of 65 cents to 75 cents on revenue of $4.3 billion to $5.1 billion, while analysts had forecast earnings of $1.09 a share on revenue of $5.67 billion. Qualcomm said it has yet to meet a final agreement with Huawei and said its outlook does not include payments from the Chinese company.
Additionally, during the third quarter of fiscal 2019, QCOM has paid cash dividends totaling $755 million, or $0.62 per share. In the fourth quarter of fiscal 2018, the company had announced a stock repurchase program authorizing the company to repurchase up to $30 billion of the common stock. At June 30, 2019, $7.8 billion remained authorized for repurchase under the stock repurchase program.