REUTERS: Qualcomm Inc shares fell about 2 per cent on Wednesday (May 1) as investors got their first look at the bottom line impact of a patent fight settlement with Apple.
The stock kept most of the 50 per cent-plus gains of the past few weeks, reflecting investor relief at a deal between the cellphone technology companies, but Qualcomm's forecasts suggested Apple's licensing fees will not be a big boost to revenue.
Qualcomm will book a one-time payment of US$4.5 billion to US$4.7 billion in the fiscal third quarter from the settlement, as Apple catches up on royalties that the iPhone maker did not pay while they were locked a legal dispute.
Excluding that payment, Qualcomm estimated US$4.7 billion to US$5.5 billion in revenue, with a midpoint slightly below the US$5.29 billion analysts were expecting, according to IBES data from Refinitiv.
The settlement, which includes a six-year patent license and a chip supply agreement, is expected to generate US$2 per share in additional earnings, Qualcomm has said. Financial details have not been disclosed but the deal is expected to help Qualcomm regain the preeminent mobile chip position it held in the early 2010s.
Qualcomm estimated US$1.23 billion to US$1.33 billion in revenue for its licensing business in the third quarter, with a midpoint slightly above analysts' consensus forecast of US$1.22 billion according to Refinitiv data.
The licensing revenue outlook includes royalties from sales of Apple products. Apple on Tuesday said its gross margin guidance, which was largely unchanged from previous quarters, included the Qualcomm settlement. Taken together, the two disclosures suggest that the patent licensing deal had little short-term financial impact.
Shares dipped 2 per cent to US$84.60 in after-hours trading. Before the close, Qualcomm shares had risen more than 50 per cent since the company announced its settlement with Apple on April 16.
Net income attributable to Qualcomm rose to US$663 million, or 55 cents per share, in the quarter ended March 31, from US$330 million, or 22 cents per share, a year earlier.
Revenue fell to US$4.88 billion, but beat analysts' estimates of US$4.80 billion.