QUALCOMM, Inc. Beats On Earnings, In Line On Revenue


Qualcomm released the earnings results from its first quarter of fiscal 2017 after closing bell tonight, posting $1.19 per share in non-GAAP earnings on $6 billion in revenue. Analysts had been expecting $1.18 per share in adjusted earnings on $6.1 billion. In the year-ago quarter, the chip maker reported $5.8 billion in revenue and non-GAAP earnings of 97 cents per share.

Qualcomm’s per-share earnings fall

The company’s GAAP earnings declined to 46 cents per share from 99 cents per share in the year-ago quarter. QCT revenues were essentially flat at $4.1 billion, while QTL revenues rose to $1.8 billion. Qualcomm shipped 217 million chips, down from 242 million the year before.

For the second quarter, the chip maker expects adjusted earnings of around $1.04 per share and $5.6 billion in revenue. For all of fiscal 2017, Wall Street is expecting $4.70 per share in adjusted earnings, compared to $4.44 per share in fiscal 2016, and $24 billion in sales.

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“Looking ahead, the pending NXP acquisition accelerates our strategic transformation in the high growth areas of automotive, IoT, security and networking,” CEO Steve Mollenkopf said in a statement. “We are very well positioned to lead as the semiconductor engine for the intelligent, connected world.”

Qualcomm in legal trouble

Qualcomm’s very business model, which involves royalties on top of chip sales, may be in jeopardy, as Apple sued the company. The iPhone maker alleges that the company has a monopoly in chips and withheld approximately $1 billion in rebate payments it owes. Apple did agree to pay a percentage of its average selling price for the iPhone to the chip maker as licensing fees and exclusively use its chips in iPhones for at least 2011 to 2016. However, Apple accuses Qualcomm of starting to hold back on some rebates in retaliation for its meeting with South Korean antitrust regulators.

Qualcomm is also in regulatory hot water in the U.S., as the Federal Trade Commission has accused it of bribing Apple not to make a WiMAX iPhone.

“The recent legal and governmental actions against Qualcomm are at their core driven by commercial disputes,” Mollenkopf said. “As we have done in the past, we will vigorously defend our business model and the value of a portfolio of technologies that has been so instrumental to the success of the mobile communications industry.”

Shares of Qualcomm declined by as much as 1.23% to $56.20 in after-hours trades.

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