Qualcomm, Inc. 3Q 2017 Earnings: Shares Fall After Results, Guidance

The Qualcomm 3Q 2017 earnings report was released after closing bell tonight. The chip maker reported non-GAAP earnings of 83 cents per share on $5.37 billion in sales, compared to the consensus estimates of 81 cents per share on $5.26 billion in revenue. In the same quarter a year ago, Qualcomm reported $1.16 per share in earnings on $6 billion in sales.

Qualcomm 3Q 2017 earnings

Qualcomm 3Q 2017 earnings amounted to 58 cents per share on a GAAP basis, down from 97 cents per share in last year’s third quarter.

Earnings before taxes in the chip maker’s QCT segment rose to $575 million from $365 million in the year-ago quarter. The segment’s earnings before taxes accounted for 14% of revenues. Qualcomm shipped 187 million MSM chips during the third quarter, compared to 201 million in last year’s third quarter.

Michael Mauboussin: Here’s what active managers can do

michael mauboussin, Credit Suisse, valuation and portfolio positioning, capital markets theory, competitive strategy analysis, decision making, skill versus luck, value investing, Legg Mason, The Success Equation, Think Twice: Harnessing the Power of Counterintuition, analysts, behavioral finance, More Than You Know: Finding Financial Wisdom in Unconventional Places, academics , valuewalkThe debate over active versus passive management continues as trends show the ongoing shift from active into passive funds. Q2 2020 hedge fund letters, conferences and more At the Morningstar Investment Conference, Michael Mauboussin of Counterpoint Global argued that the rise of index funds has made it more difficult to be an active manager. Drawing Read More

Qualcomm’s QTL segment brought earnings before taxes of $854 million, down from $1.75 billion last year. The segment’s earnings before taxes accounted for 73% of revenues, down from 86% last year.

IP issues continue for Qualcomm

The chip maker said the actions of Apple’s contracted suppliers weighed on its third quarter results. They didn’t fully report and didn’t pay royalties on Qualcomm’s patents as used in Apple products. Qualcomm also said another dispute with another licensee that didn’t report or pay patent licensing royalties had a negative impact on its third quarter, which ended June 25. The chip maker expects all these licensees to keep holding back royalty payments until the disputes are resolved.

The company also shelled out $940 million to BlackBerry in connection with IP licensing as a result of an arbitration ruling in favor of the Canadian firm. Additionally, Qualcomm had to pay $927 million in fines to the Korea Free Trade Commission.

Qualcomm issues Q4 guidance

Qualcomm also provided guidance for the fourth quarter, which exclude QTL revenues from sales of Apple products by the iPhone maker’s suppliers and the other licensee the company is in dispute with.

Qualcomm projects between $5.4 billion and $6.2 billion in revenues for the fourth quarter, compared to $6.2 billion in last year’s fourth quarter. On a GAAP basis, the chip maker expects earnings to be between 55 cents and 65 cents per share, compared to $1.07 in the year-ago quarter.

It looks for non-GAAP earnings of 75 cents to 85 cents per share, compared to $1.28 per share last year. Qualcomm expects to ship 205 million to 225 million MSM chips, versus 211 million in last year’s fourth quarter, and record QTL revenues of $1 billion to $1.3 billion, against $1.9 billion last year.

Following the Qualcomm 3Q 2017 earnings report, the chip maker’s stock slumped by as much as 2.43% to $55.40 in after-hours trades.