Qualcomm’s net income took a hit in the most recent quarter thanks to a recent $853 million fine implemented by South Korean regulators, but the company appears to have already turned its attention to its next battle, this time with Apple.
In its first fiscal quarter of 2017, Qualcomm reported net income of just $682 million, down from $1.6 billion the previous quarter and $1.5 billion in the year ago period. Revenue of $6 billion fell slightly short of a Zack’s survey consensus of $6.12 billion, but was up a hair from $5.8 billion the year prior. Earnings per share came in at 46 cents, while non-GAAP EPS was $1.19.
MSM chip shipments were down 10 percent year over year, but 3G/4G device shipments were up 8 percent from the year prior to a range of 331 million to 335 million (though they were down 17 percent sequentially).
“We are pleased with the strong start to our fiscal year and the year-over-year earnings growth across both our semiconductor and licensing businesses,” Qualcomm CEO Steve Mollenkopf said in a statement. “Looking ahead, the pending NXP acquisition accelerates our strategic transformation in the high growth areas of automotive, IoT, security, and networking. We are very well positioned to lead as the semiconductor engine for the intelligent, connected world.”
Qualcomm briefly noted it is in the midst of appealing the aforementioned South Korean fine. But Mollenkopf and Qualcomm President Derek Aberle dedicated a significant portion of time rebutting claims made by Apple in its recent lawsuits in the United States and China.
“Not only are Apple’s claims without merit, but an attempt to undermine the standards-based agreements that have been the backbone of the mobile revolution, the framework that has facilitated and motivated a small number of companies, like Qualcomm, to make investments to develop new technology, as well as the products and infrastructure to support that technology,” Aberle said.
Despite a point-by-point refutation of Apple’s complaints, Mollenkopf noted the historically good relationship between the two companies and said Qualcomm would continue to supply Apple with chips through the dispute.
“Historically, we’ve had a strong relationship with Apple, and they have been a long standing and valued customer,” Mollenkopf said. “We intend to remain a good supplier to Apple, even while this dispute continues, and believe there is no better long-term partner for Apple than Qualcomm and our industry-leading technology.”
And Qualcomm has a good reason to try to stay on Apple’s good side. Apple and rival smartphone maker Samsung account for nearly 40 percent of Qualcomm’s revenue between chip orders and licensing fees, CFO George Davis said.
