BUSINESS Qualcomm's earnings top estimates as modem chip sales surge

BUSINESS

Qualcomm's earnings top estimates as modem chip sales surge

Reuters

07:49, February 01, 2018

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A sign on the Qualcomm campus is seen in San Diego, California, US November 6, 2017. Photo: Reuters/Mike Blake  

Chipmaker Qualcomm Inc’s earnings and revenue topped Wall Street forecasts for the first fiscal quarter as demand surged for its chips used in smartphones and cars, making up for a fall in licensing revenue.

The results come as San Diego-based Qualcomm tries to rebuff a $103-billion takeover approach by Broadcom Ltd and close its long-pending $38-billion deal to buy automotive chip maker NXP Semiconductors.

Qualcomm is trying to convince shareholders that it can boost earnings as a standalone company through a $1 billion cost reduction plan and by resolving license disputes including a high-profile patent battle with Apple Inc.

Strong quarterly results in Qualcomm’s CDMA technologies (QCT) unit that makes modem chips contrasted with a steep fall in revenue in the licensing business.

Weighed down by the Apple dispute, the licensing business posted a 28 percent fall in revenue to $1.30 billion in the first quarter ended Dec. 24.

Apple sued Qualcomm last January, accusing it of overcharging for chips and of refusing to pay some $1 billion in promised rebates.

Revenue at the QCT business rose 13 percent to $4.65 billion. Qualcomm posted a net loss of $5.95 billion compared to a profit of $682 million a year earlier, reflecting a $6 billion one-time charge because of new US tax laws.

Excluding one-time items, Qualcomm earned 98 cents per share, topping analysts’ average estimate of 91 cents, according to Thomson Reuters I/B/E/S.

Revenue rose 1.2 percent to $6.07 billion and exceeded analysts’ estimates of $5.93 billion.

Shares of the company were slightly lower at $67.70 in after-hours trading on Wednesday.

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