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Qualglumm: Still no royalties from Apple, tax hits, EU fine, flat sales

Investors give shares a bumpy ride... and settle on no change in after-hours trading

By Thomas Claburn in San Francisco

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US chip designer Qualcomm on Wednesday reported $6.1bn flat-growth revenues for its first fiscal quarter of 2018, which ended on December 24, 2017.

The stronger-than-expected results come a week after the wireless networking, processor crafting, and patent-wielding biz was hit with a $1.2bn fine by EU regulators over payments to keep Apple from ditching its chips for those of competitors.

Apple coincidentally sued Qualcomm a year ago for about $1bn, claiming unreasonable prices and unfair competition. The legal battle has since sprawled into a handful of other countries beyond the US and prompted patent infringement countersuits from the San Diego, California-based company.

Qualcomm is also trying to fend off a hostile $105bn takeover bid from Broadcom, which has accused the chip biz of being willing to "say anything to remain a standalone company." Earlier this month, it sent a letter to shareholders advising them to reject the bid.

The EU penalty, together with $6bn charge tied to US tax code changes, puts the firm's GAAP loss-per-share at $4.03 and a net loss of $6bn versus a year-ago profit of $682m. If you toss generally accepted accounting practices out the window, the company's non-GAAP earnings-per-share amount to $0.98.

Bump

Analysts on average had been expecting $0.91 per share and revenue of $5.93bn, according to Thomson Reuters. The company's stock price had a bumpy ride taken in after-hours trading, and it's now flat at $68.15 apiece.

Also figuring into investor optimism is Qualcomm's announcement of an expansion of its cross-licensing arrangement with Samsung.

In its earnings release, Qualcomm said is fiscal Q1 and its previous quarter results "were negatively impacted by our continued dispute with Apple and its contract manufacturers (who are Qualcomm licensees), as well as the previously disclosed dispute with another licensee."

The company said it didn't see any revenue from licensing fees owed by Apple or another unnamed licensee during this period. At year ago, licensing revenue from Apple and the undisclosed firm amounted to $740m.

Looking ahead, Qualcomm anticipates revenue ranging from $4.8bn to $5.6bn for its fiscal Q2 2018.

On the Qualcomm earnings call, in response to a question about future revenue projections, CFO George Davis suggested Qualcomm doesn't see a need to quickly settle its legal and licensing dispute with Apple.

"We're not highly dependent on a peace dividend to deliver this number," he said. ®

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