Qualcomm Inc.’s (NASDAQ:QCOM) ongoing legal battle with Apple inc. (NASDAQ:AAPL) overshadowed its third quarter results as the chipmaker said its revenue fell 12%.
Revenue in three months ended 25 June came to US$5.4bn, down from US$6.0bn the same period a year ago, with Qualcomm blaming the decline on Apple’s failure to pay royalties it allegedly owes the group.
Net income dropped 40% to US$0.9bn from US$1.4bn and earnings per share fell 28% to US$0.83 from US$1.16.
Shares slid 2.48% to US$55.37 in US pre-market trading.
Qualcomm is seeking significant damages after Apple sued it for at least US$1bn in January on claims it charged royalties for technology that the iPhone maker has “nothing to do with”.
Apple uses Qualcomm’s chips in its iPhones but it does not pay for the technology. It instead pays through contract manufacturers in Asia, such as Foxconn, which build the iPhone. Apple claims that it has been overcharged billions of dollars indirectly by Qualcomm.
But Qualcomm maintains that Apple withheld a similar amount from four contract manufacturers, which as a result held back from payments to Qualcomm.
Qualcomm said in its third quarter results today that it believes it has the upper hand in the dispute.
Apple and Qualcomm’s legal war is making Wall Street nervous https://t.co/QCuh8vyM90
— Brian Hurley (@brianhurley) 20 July 2017
“We believe that we hold the high ground with regard to the dispute with Apple, and we have initiated new actions to protect the well-established value of our technologies,” said chief executive Steve Mollenkopf.
As its tug-of-war with Apple drags on, Qualcomm did not provide any metrics related to device sales in its third quarter results as it is currently not a “meaningful” reflection of its performance.
Revenue from the group’s Qualcomm CDMA Technologies (QCT) unit –which includes the chip business— rose 5% US$4.05bn, while revenue from its licensing business fell 42.5% to US$1.17bn.
Qualcomm forecast adjusted profit of US$0.75 to US$0.85 per share and revenue of US$5.4bn to US$6.2bn for the fourth quarter.