SAN JOSE, Calif. – You know when you hear as many as five executives on a quarterly conference call, times are challenging. So it was when Qualcomm Inc. reported results for the end of its fiscal 2017.
Quarterly and annual revenues of $5.9 billion and $22.3 billion were both down 5 percent compared to 2016 results, using GAAP figures. Given the loss of licensing revenues from Apple and another unnamed customer, it was not surprising profits took a bigger dive to $200 million for the quarter and $2.5 billion for the year, down 89 percent and 57 percent from 2016, respectively.
The forecast is for continued grim weather. The mobile chip giant expects flat revenues for its next quarter despite a 5 percent expected rise in its chip set unit sales. Overall cellular device unit sales could rise 8 percent next year, but their average selling prices may drop given a growing share are going into more cost-sensitive systems in cars, networking and the Internet of Things.
Qualcomm’s CEO and CFO were joined on the call by two of its legal experts and its chip set group manager. They fielded several questions on a delayed merger with NXP and multiple legal disputes with Apple but provided few new details.
Executives said they are hopeful the NXP deal will be approved soon by four regulators still reviewing it, but it might take until early 2018. They suggested they see no immediate resolution for the many legal disputes over patent licensing with Apple. Separately they provided no meaningful insights on a separate dispute with an unnamed customer that stopped paying royalties in the second quarter.
Speaking of the multiple court cases with Apple, Qualcomm general counsel Donald Rosenberg said, “litigation of this magnitude takes a while, you can’t focus on any particular short-term event.”
Cases Qualcomm brought against Apple with the U.S. International Trade Commission and in Germany may move more quickly than others with some results expected by mid- to late 2018. However, “until then, I don’t think you will see much of consequence in terms of an ultimate outcome, and it will play out like most complex litigation,” he added.
Apple and Samsung are still battling over a massive patent infringement suit that goes back to 2012 that even had a hearing at the Supreme Court in 2016.
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Royalty losses dragged down results amid a maturing smartphone market. Click to enlarge. (Source: Qualcomm)