Qualcomm Expands Licensing Deal With Samsung as Charges Cut Into Profit -- Update
January 31 2018 - 5:04PM
Dow Jones News
By Austen Hufford
Qualcomm Inc. entered into an expanded deal with one of its
biggest customers and beat revenue estimates in its latest quarter
even as it swung to a deep loss.
Qualcomm said Wednesday that it had reached a multiyear deal
with Samsung Electronics Co. that covers various areas including
mobile devices. The deal, which extends through the use of the
next-generation of wireless internet, known as 5G, provides some
stability to Qualcomm, which is currently in a patent dispute with
its other big customer, Apple Inc. Both Samsung and Apple were
responsible for more than 10% of Qualcomm revenue in its last
fiscal year.
In its fiscal first quarter, Qualcomm took a $6 billion charge
related to the new U.S. tax law and a $1.2 billion charge for a
fine imposed by the European Commission, which claimed that
payments made to Apple to entice it to exclusively use Qualcomm
chips were anticompetitive.
The company posted a loss of $6.07 billion, or $4.03 a share,
compared with a profit of $700 million, or 46 cents a share, in the
same period a year earlier. On an adjusted basis, which takes out
the charges, the company brought in 98 cents a share, above the 91
cents analysts polled by Thomson Reuters had expected.
Shares fell 0.4% in after-hours trading.
The chip maker, facing a hostile takeover bid by Broadcom Ltd.
and continuing attacks on its business model from customers and
regulators, has told investors in a recent presentation that it
could boost profit by fiscal 2019.
Qualcomm also said its proposed deal to buy NXP Semiconductors
NV for $39 billion should close in early 2018. The companies
originally announced the deal in October 2016.
In all, revenue rose 1.2% to $6.07 billion, above Wall Street
estimates of $5.93 billion.
For its current quarter, Qualcomm expects revenue of $4.8
billion to $5.6 billion and adjusted earnings per share of 65 cents
to 75 cents.
Analysts had expected revenue for the second quarter of $5.58
billion and adjusted earnings per share of 85 cents.
Qualcomm is one of the largest providers of communications chips
for smartphones, and its products form the heart of many higher-end
phones. As a holder of patents essential to implementing cellular
standards, Qualcomm collects royalties on many smartphones sold
world-wide, regardless of whether they include the company's
chips.
However, Apple has been blocking royalty payments while it
pursues court cases alleging Qualcomm engages in unfair practices.
Revenue from licensing intellectual property, which typically
contributes significantly to Qualcomm's earnings, fell 27%.
Chip shipments rose 9% in the quarter as chip revenue rose 13%
to $4.65 billion.
Qualcomm expects global shipments of 3G and 4G devices in 2018
to rise 7%, coming in between 1.85 billion and 1.95 billion.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
January 31, 2018 17:49 ET (22:49 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Samsung Electronics (PK) (USOTC:SSNHZ)
Historical Stock Chart
From Apr 2024 to May 2024
Samsung Electronics (PK) (USOTC:SSNHZ)
Historical Stock Chart
From May 2023 to May 2024