(Reuters) – Qualcomm Inc. predicts sales revenues in the holiday shopping quarter, below analysts' estimates on Wednesday, as a result of Apple Inc.'s loss of chip sales, sending shares up 3.4 percent.
The Qualcomm logo is displayed on November 7, 2018, at the China International Importation Expo (CIIE) China National Exhibition and Conference Center in Shanghai, China. REUTERS / Aly Song
The San Diego chipmaker also forecasted its fiscal first-quarter profit of 2019, which exceeded the estimates of analysts, but forecasts that were better predicted were mainly due to a one-off tax allowance of around 45 cents per share.
Qualcomm is the world's largest supplier of smartphone chips, but has been shaken by the slowdown in industry and Apple's huge losses.
Similar problems have also arisen in the patent licensing model, which reduces the sales price of the mobile phone, both from competition regulators and from customers, including Apple, which is accusing Qualcomm of its practice.
The iPhone maker has turned off Qualcomm from the new iPhones XS and XS Max and XR, introduced in September, rather than choosing competing Intel Corp modem chips.
Earlier this summer, Qualcomm warned its shareholders that Apple was likely to take action, but the impact was faster than expected on Wall Street.
Qualcomm predicts revenues of $ 4.5 billion to $ 5.3 billion (£ 3.4 billion and £ 4 billion) in the first fiscal quarter ending December, with a revised profit of 1.05 to 1.15 US dollars dollars per share. According to IBIN, analysts were expecting refinancing from revenues of $ 5.57 billion and a profit of $ 95 per share.
Qualcomm's finance director, George Davis, told Reuters that roughly half of Apple's chips' purchases usually came on a quarterly basis. Davis said Wall Street analysts could have expected Apple's losses to be more common over the year.
"Our management reduces over 50 million (microchip) units in a quarter, and all this explains the lack of an Apple phone," Davis told Reuters. "It really is a difference."
On the revenue side, Davis said that the adjusted earnings per share of $ 1.05 to $ 1.15 amounted to 45 percent of the tax-exempt shareholding, which would not be repeated.
Earlier on Wednesday, Reuters reported that Apple did not negotiate "for any level" to settle the lawsuit with Qualcomm, according to a person familiar with the matter. Davis said that in a dispute with licensees, including Apple, there was "a lot of attention both internally and externally," but did not comment on whether both parties were talking about an agreement.
Qualcomm has tried to compensate for some of Apple's and litigation problems by easing some of the licensing requirements that helped save big customers like Samsung Electronics Co., Ltd. with new license offerings.
Apple Compensation is also a new partnership between Qualcomm and Chinese mobile phone manufacturers, including Xiaomi Corp., Oppo, Vivo and OnePlus, and all of them offer lower pricing models in emerging markets such as India.
David said that Chinese phone manufacturers are increasingly making higher prices for devices using the Qualcomm 700 and 800 series Snapdragon chips that helped boost sales.
"Although we made some changes to the licensing program, which allowed our customers to effectively lower the rate, they returned to us with a higher (microchip) unit sales form," Davis said.
By deducting items, Qualcomm earned 90 cents a share in the fourth fiscal quarter, which ended in September, surpassing analysts' estimates of 83 cents, according to IBIN data from Refinitiv.
Revenue fell to $ 580 billion in the fourth quarter of fiscal fiscal year but still exceeded $ 5.52 billion.
Qualcomm's loss was $ 493 million or $ 35 per share for the quarter ended September 30, compared to a profit of $ 168 million, or 11 cents a share a year earlier. (bit.ly/2Pf8YvL)
Reports in Sonam Rai Bengaluru and Stephen Nellis in San Francisco; Edits Patrick Graham and Lisa Shumaker