Qualcomm revenue dips 20% to $4.84 bn due to Apple impact

Qualcomm revenue fell 20 percent during the first quarter of fiscal 2019 to $4.84 billion and posted $1.1 billion net income.
Qualcomm revenue in Dec 2018
The reason for the 20 percent drop in the quarterly revenue was the non-receipt payment from Apple and its contract manufacturers.

Qualcomm revealed it received $150 million from Huawei in the first quarter of fiscal 2019.  Qualcomm also received $100 million under a prior interim agreement with Huawei in the fourth quarter of fiscal 2018.

Qualcomm is still talking to Huawei to finalize the pending royalty payment for licensing its technology.

Qualcomm, which generates most of its profits by licensing its technology to mobile phone makers and others, said that under the deal reached with Huawei, the Chinese company is paying $150 million per quarter for three quarters as the two work toward a final resolution of a licensing dispute.

“If we do not reach a final agreement with Huawei prior to the conclusion of the interim agreement, Huawei may not make any other payments or may not make full payments under the existing license agreement,” Qualcomm said.

Qualcomm CEO Steve Mollenkopf said the deal for the next three quarters is still less than Qualcomm believes it is owed but that the new deal is “on slightly better terms, which is very good.”

Qualcomm said it now has signed 35 customers to its 5G licensing program and expects the business to generate between $1 billion and $1.1 billion in revenue for the quarter ending in March.

IHS Markit report said the 5G smartphone growth will be significantly better in the first four years of launch as compared to historical figures for 4G smartphones.

Wayne Lam, principle analyst for IHS Markit, said: “5G electronic ecosystem is significantly more mature, at this point, compared to the same time during the LTE transition. Key 5G chipsets have been tested, proven and designed into devices, and the industry is now poised to deliver their first 5G smartphone in early 2019.”

Reuters reported that legal worries around the company’s licensing division have weighed heavily on Qualcomm over the past two years as it wages a costly and broad-ranging dispute with iPhone maker Apple and government regulators.

Qualcomm’s modem chip shipments fell 21.5 percent to 186 million in the fiscal first quarter of 2019.

Qualcomm said it expects current-quarter revenue of between $4.4 billion and $5.2 billion without indicating about the contribution of 5G smartphone chips.

“The revenue outlook reflects the weakness of the smartphone trends in the March quarter, but we think Qualcomm might see catalysts from initial 5G smartphone launches,” said Jun Zhang, managing director of Rosenblatt Securities.

Other chipmakers, including Taiwan Semiconductor Manufacturing (TSMC), Samsung and Intel, delivered lower-than-expected sales forecasts this month, citing economic weakness in China, Reuters reported.