Facing Big Lawsuits, Qualcomm’s Revenue Misses Estimates

Jan 25, 2017

Qualcomm reported a lower-than-expected 3.9% rise in quarterly revenue, at a time when the chipmaker is facing multiple legal challenges over its alleged "anticompetitive" tactics.

The company's shares were down nearly 3% at $55.20 in aftermarket trading on Wednesday.

Qualcomm also forecast current-quarter adjusted profit of $1.15-$1.25 per share and revenue of $5.5 billion-$6.3 billion.

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Analysts on average were expecting a profit of $1.20 per share and revenue of $5.90 billion, according to Thomson Reuters.

The U.S. Federal Trade Commission and Apple (aapl) have sued Qualcomm (qcom) accusing the chipmaker of resorting to "anticompetitive" tactics to maintain a monopoly over key semiconductors in mobile phones.

Apple also filed a lawsuit against Qualcomm in Beijing on Wednesday, alleging that the chip supplier abused its clout in the chip industry and is seeking 1 billion yuan ($145.32 million) in damages.

South Korea's antitrust regulator, The Korea Fair Trade Commission, fined Qualcomm 1.03 trillion won in December for what it called unfair business practices in patent licensing and modem chip sales.

The company said on Wednesday the latest quarter included an $868 million charge related to the KFTC investigation.

Why Qualcomm Is Betting Big on 5G

Qualcomm is a major supplier to both Apple and Samsung (ssnlf), with the two accounting for 40% of the company's $23.5 billion in revenue in 2016.

The Qualcomm Technology Licensing (QTL) business, which contributed about 85% of the company's earnings before taxes in 2016, generates royalties earned through the licensing of wireless patents to the mobile industry.

Net income attributable to the company more than halved to $682 million, or 46 cents per share, in the first quarter ended Dec. 25, due to the charge.

Apple's Latest Billion-Dollar Lawsuit Targets Qualcomm

Revenue rose to $6 billion from $5.78 billion, but missed analysts' estimate of $6.12 billion.

Excluding items, Qualcomm earned $1.19 per share, just above the average analyst estimate of $1.18.

Qualcomm's shares had risen nearly 20% in the past 12 months, compared with the 62.1% gain in the broader Philadelphia Semiconductor index.

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