Qualcomm issued a surprisingly bullish forecast for the current quarter, showing that robust demand for the company’s chips in China is making up for lost revenue from a bruising legal brawl with Apple, according to Bloomberg.
Sales in Qualcomm’s fiscal first quarter will be $5.5 billion to $6.3 billion. Earnings per share, excluding some items, will be 85 cents to 95 cents, the company said in a statement. Analysts expected $5.92 billion and 91 cents a share, on average, according to data compiled by Bloomberg.
CEO Steve Mollenkopf is besieged by legal disputes with Apple, one of his largest customers, and government agencies around the world that threaten to undermine Qualcomm’s technology licensing business, which generates most of its profit. Still, the company’s chip unit, which contributes the majority of revenue, is winning market share from rivals and benefiting from demand for expensive phones in China.
Qualcomm’s profit in the fiscal fourth quarter was 92 cents a share, excluding certain items. Revenue was $6 billion. Analysts had predicted adjusted earnings per share of 82 cents on revenue of $5.81 billion. Still, the company posted its third consecutive annual revenue decline and its legal woes may keep future sales under pressure. Licensing revenue in the current period will be $1.1 billion to $1.3 billion, the company said. That’s a decline of as much as 39 percent from a year earlier.
The latest blow came earlier this week: Apple is designing iPhones and iPads for 2018 that don’t use components from Qualcomm, according to a person familiar with the matter. If that business went away it would cut Qualcomm revenue by about 7.5 percent.
Qualcomm has sued Apple again this week, accusing the iPhone maker of failing to abide by the terms of a software license and said it may have used its unprecedented access to that code to help Intel. The chipmaker filed the lawsuit in California state court in San Diego, adding yet another front to their bitter legal battle.
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