As the result of a prolonged intellectual property lawsuit against Apple, chip production company Qualcomm’s profits and share prices have taken a major dive.
Earlier this year, Apple filed a lawsuit against Qualcomm, stating that the latter was overcharging for its chips and had asked manufacturers to withhold license payments so long as the case dragged on. As a result of the withholding of royalties, Qualcomm reported a steep fall in Q3 profits, due to missing out on revenue.
“We believe that we hold the high ground with regard to the dispute with Apple,” Qualcomm Chief Executive Steve Mollenkopf said in a statement.
According to company forecasts, Qualcomm expected a profit of 85 cents per share and an overall revenue of $6.2 billion. However, the actual profit per share was 75 cents and revenue was $5.4 billion. Net income attributable to the company fell to $866 million, or 58 cents per share, in the third quarter which ended June 25 from $1.44 billion, or 97 cents per share, a year earlier.
“(Forecast) is pretty strong on the revenue front… the chip business is looking good especially in China, where it is getting pretty good traction with Chinese manufacturers,” Edward Jones analyst Dave Heger said.
“If Apple hadn’t interfered with the licenses and instructed the contract manufacturers to take these actions the contract manufacturers would not be contesting the licenses now,” President Derek Aberle said.
Despite this, Qualcomm is confident that the end of the year will be good for its business, especially highlighting its non-mobile operations — especially automotive and industrial internet — which are up 30 percent this year.
Megha Shah for TechFunnel.com