Qualcomm to book $4.5 bn revenue from Apple settlement

Qualcomm reported 5 percent drop in its revenue to $5 billion in its fiscal second quarter ended March 31, 2019.
Qualcomm for mobile chipsQualcomm achieved operating income of $0.9 billion and net income of $0.7 billion during the quarter.

Steve Mollenkopf, CEO of Qualcomm, said: “Our 5G technology and product leadership, as well as our expansion into new industries and product categories, creates a strong foundation for long-term revenue and earnings growth.”

Qualcomm on April 16 announced agreements with Apple and its contract manufacturers to dismiss litigation between the parties.

Qualcomm also entered into a six-year patent license agreement with Apple and a multi-year chipset supply agreement with Apple.

Apple and Qualcomm

# Direct license between Apple and Qualcomm: six years with two-year option to extend
# Apple will pay royalties to Qualcomm
# Settlement includes a one-time payment from Apple to Qualcomm
# Multi-year chipset supply agreement
# All litigation will be dismissed and withdrawn
# Contributes to increased stability for licensing business

Qualcomm is expecting a revenue of $9.2 billion – $10.2 billion in Q3 fiscal 2019 because of its settlement with iPhone maker Apple. Qualcomm had reported $5.6 billion revenue in Q1 fiscal 2018.

Qualcomm said its financial guidance for the third quarter of fiscal 2019 includes estimated revenues of $4.5 billion to $4.7 billion resulting from the settlement, consisting of a payment from Apple and the release of obligations to pay or refund Apple and the contract manufacturers certain customer-related liabilities.

Its financial guidance for the third quarter of fiscal 2019 also includes $150 million of QTL revenues from Huawei. This payment does not reflect the full amount of royalties due under the underlying license agreement, Qualcomm said.