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Qualcomm Posts Loss as Revenue Slips

Qualcomm             Inc.swung to a loss in its last quarter, as sales in the company's unit that develops mobile modem technology…

Qualcomm
Inc.

swung to a loss in its last quarter, as sales in the company’s unit that develops mobile modem technology were flat and its licensing business continued to be hurt by a continuing fight with

Apple
Inc.

San Diego-based Qualcomm on Wednesday posted a loss of $ 493 million, or 35 cents a share, compared with a profit of $ 1

68 million, 11 cents a share, in the year-earlier period. Qualcomm also struggled with expenses in the most recent quarter, as total costs rose 16% to $ 6.46 billion.

On an adjusted basis, Qualcomm reported profit of 90 cents a share, exceeding the 83 cents a share expected by analysts polled by FactSet .

Qualcomm booked $ 5.8 billion in revenue for the quarter, off 2% from a year earlier. Analysts had expected $ 5.53 billion.

The company booked $ 4.65 billion in sales in its segment that creates chipsets used in mobile devices, roughly flat from last year. Earnings before taxes in the business fell 18% to $ 796 million, according to the company. Qualcomm said mobile modem shipments rose 5%, however.

In its licensing segment, sales fell 6% to $ 1.14 billion and earnings before taxes dropped 11% to $ 739 million. Qualcomm did not record any licensing revenue in the quarter from Apple, which is withholding royalties from Qualcomm in a dispute about the company’s licensing practices.

Qualcomm has accused Apple of transferring its intellectual property to

Intel
Corp.

, which is supplying chips for new-model iPhones.

Meanwhile, earlier this week, a federal judge ruled that Qualcomm must license some of its patents to rival chip suppliers in an antitrust suit brought by the Federal Trade Commission. The ruling has the potential to upend Qualcomm’s practice of licensing to device makers rather than chip suppliers, some analysts say.

During a call with analysts Wednesday, Chief Executive Steve Mollenkopf said the FTC “ruling is incorrect.” He said the company is focusing on settling the case, which goes to trial in January.

“There is nothing in the order that complicates that, and in the meantime, we are not forced to do anything differently with the business,” Mr. Mollenkopf said.

A slowdown in global smartphone sales is compounding Qualcomm’s licensing hassle. The company expects modem chip shipments to decline 22%, or about 185 million units, during the three months ending in December. The company said that decline partly reflects Apple’s release of new iPhones without Qualcomm modem chips.

Shares in Qualcomm were down 4.3% in after-hours trading. The company’s stock closed down 0.7% earlier Wednesday.

For the current quarter, the first in the company’s new fiscal year, Qualcomm forecasts revenue between $ 4.5 billion and $ 5.3 billion, and earnings per share between 78 cents and 88 cents. Adjusted earnings are expected to be between $ 1.05 a share and $ 1.15 a share, ahead of the consensus forecast from analysts of 94 cents a share.

Qualcomm has faced a series of challenges in its latest fiscal year. Earlier this year, the company fended off a takeover bid by

Broadcom
Inc.,

a deal ultimately quashed by President Trump.

In June, Qualcomm announced its proposed $ 44 billion acquisition of Dutch chip maker

NXP Semiconductors

NV nadat de goedkeuring door de Chinese regelgevers niet werd goedgekeurd.

Qualcomm also remains locked in a separate dispute with Chinese smartphone maker Huawei Technologies Co., which is also withholding royalty payments.

Qualcomm said it repurchased 254.6 million shares valued at $ 21.14 billion in the September period, fulfilling a commitment it made after abandoning its offer for NXP.

Write to Micah Maidenberg at [email protected]

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