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Qualcomm on Wednesday released clogged financial results for its fourth fiscal quarter, while the ongoing dispute with Apple over patent fees continues to weigh on its business.
The San Diego cellular technology company saw its revenues reach $ 5.8 billion for the quarter. This exceeded Wall Street analysts' forecasts, but was 2% lower than the same quarter last year.
The company has moved to a loss of $ 500 million – or 35 cents per share – under generally accepted accounting principles. This loss is partly explained by the $ 2 billion demolition costs paid to NXP Semiconductors following the merger of a merger following trade tensions between the United States and China.
Adjusted earnings, which exclude certain expenses, outpaced analysts' expectations, thanks to strong chip sales in China and lower operating costs.
Adjusted earnings were $ 1.3 billion, or 90 cents per share. Analysts predicted 83 cents a share for the quarter.
"We had a strong quarter, with non-GAAP earnings per share above expectations," said Chief Executive Steve Mollenkopf. "We are achieving our strategic goals, including stimulating the commercialization of 5G globally in 2019."
Lately, Qualcomm's financial results have been sidelined by the myriad of legal tornadoes swirling around its business.
Analysts were looking for up-to-date information from executives on these more important issues during the earnings conference call.
There have been partial responses, including a ruling by a federal judge on Tuesday that Qualcomm is required to license essential patents to competing chip makers.
The partial summary judgment rendered by US District Judge Lucy Koh was issued as part of an antitrust litigation against Qualcomm by the US Federal Trade Commission in early 2017. It could potentially open the patent licensing at the chip level, which would be a break with Qualcomm's current practice. to charge royalties on patents based on the wholesale price of smartphones.
Mollenkopf said the company felt Koh's decision was "incorrect". Nevertheless, the company wants to continue working with the FTC on how to resolve the dispute.
"In every legal detail, I want to make sure that we do not lose sight of the fact that our goal here in the short term is to know how we can settle the FTC case," said Mollenkopf . "There is nothing in this order that complicates that, and in the meantime we are not obliged to do anything else with our company."
Qualcomm's fight with Apple, however, is wreaking havoc.
Apple and China-based contract manufacturers that build iPhones have been holding down patent royalty payments to Qualcomm since the beginning of last year.
At a recent hearing, a Qualcomm lawyer claimed that Apple and the outsourcing manufacturers owed $ 7 billion in late patent fees.
In addition, Apple no longer uses Qualcomm chips in iPhones. He switched to Intel for all new flagship models.
As a result, Qualcomm expects a 50 to 55 million reduction in the number of chips shipped during the quarter, which is generally when Apple buys most of its iPhone chips.
Companies are fighting in courts around the world. To date, a handful of patent infringement cases brought by Qualcomm against Apple in Germany are pending or have failed.
Last month, an administrative law judge from the US International Trade Commission said that Apple had infringed a Qualcomm patent. But the judge refused to ban the importation of certain models of counterfeit iPhones, which Qualcomm had asked.
"Qualcomm's progress against Apple in a number of preliminary efforts has not been remarkable," said Bernstein's research analyst, Stacy Rasgon, in a report. "At this point, we do not see why Apple would have a real reason to settle unless proposing a settlement that is clearly advantageous to them."
Qualcomm has filed new patent infringement cases against Apple in the United States, Germany and China.
"We have 20 patent infringement cases in several jurisdictions in China, where intellectual property courts have proven very effective in protecting intellectual property rights and, in many cases, issuing injunctions," said Don Rosenberg , General Counsel of Qualcomm.
A second smartphone maker, supposed to be Huawei, also holds royalties. Although some payments were made – including $ 500 million in the third quarter and $ 100 million in the fourth quarter – the dispute has not been resolved.
For full year 2018, Qualcomm sales increased 2% to $ 22.7 billion. It lost $ 4.9 billion, or $ 3.32 per share, under generally accepted accounting principles. This compares to a profit of $ 2.5 billion the year before.
Adjusted earnings were $ 5.4 billion, or $ 3.69 per share. This corresponds to an adjusted profit of $ 4.28 per share for the 2017 fiscal year.
Qualcomm expects sales for the current quarter to be between $ 4.5 billion and $ 5.3 billion. Adjusted earnings are estimated at between $ 1.05 and $ 1.15 per share.
The company released its results on Wednesday after the markets closed. Its stock closed at $ 63.21, but dropped 4.6% after trading hours to $ 60.25 on the Nasdaq.
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