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Tuesday, May 21, 2024

Qualcomm forecasts more headwinds from Apple

Qualcomm Inc.’s revenues for the fourth quarter beat analyst expectations, but the San Diego-based chipmaker’s stock dipped on falling forecasts for next year. The company appears to expect continued challenges as it continues to wage its battle with Apple Inc. over licensing fees.

For fiscal year 2018, Qualcomm reported total revenues of $22.7 billion, up two percent from 2017. The company reported 855 million chip shipments, up six percent year-over-year. Its licensing revenues, however, fell 20 percent year-over-year to $5.16 billion, primarily driven by the company’s ongoing dispute with Apple Inc.

Qualcomm previously claimed Apple was $7 billion behind in royalty payments since the phone maker stopped paying licensing fees in April of 2017. Qualcomm also reported receiving payments of $600 million in fiscal year 2018 from an interim agreement from another licensee that had disputed the payments.

“If we do not reach a final agreement with the other licensee, it may not make any other payments or may not make full payments under the existing license agreement,” Qualcomm stated in an earnings report. “Royalty revenues related to the products of Apple’s contract manufacturers and the other licensee in dispute were approximately $1.7 billion in fiscal 2017.”

“Resolving those two licensing disputes is a key driver for our fiscal 2019 performance,” CFO George Davis said in a Nov. 7 earnings call.

Qualcomm reported a net loss of $4.9 billion for fiscal year 2018.

For the quarter ending Sept. 30, Qualcomm reported the following results:

  • Total revenues of $5.8 billion, down 2 percent from 2017.
  • Chip shipments of 232 million, up 5 percent from 2017
  • Licensing revenues of $1.14 billion, down 6 percent from 2017.
  • Net loss of $0.5 billion

Next quarter, the company forecasted revenues of $4.5 billion to $5.3 billion, down 13 percent to 26 percent from 2018. Qualcomm also forecasted an 18 percent to 26 percent decrease in chip shipments, for a total of 175 million to 195 million units. That factors in the loss of Apple as one of Qualcomm’s largest customers, resulting in a reduction of 55 million units.

Qualcomm also forecasted licensing revenues of $1 billion to $1.1 billion, down 15 percent to 23 percent from the first quarter of 2018.

Qualcomm’s stock dipped after hours to $61, primarily driven by the lower forecast for the first quarter of 2019.


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