An ongoing spat with Apple and a $2 billion termination charge from a failed bid to acquire NXP Semiconductor cut into Qualcomm’s fiscal Q4 earnings, dragging the company into the second net loss of its financial year.
A loss of $493 million in the three months to end-September was down from a profit of $168 million in fiscal Q4 2017. Revenue slipped 2 per cent to $5.8 billion, as licensing revenue fell 6 per cent to $1.1 billion and Qualcomm Technologies revenue remained flat at $4.6 billion.
Full year fiscal 2018 revenue of $22.7 billion was up 2 per cent from fiscal 2017, but net income plummeted from a profit of $2.6 billion in the 2017 fincancial year to a $4.9 billion loss in fiscal 2018.
Company executives warned on an earnings call the pressure will remain in effect through the first half of its fiscal 2019, due in large part to lost licensing revenue from Apple manufacturers and the iPhone maker’s decision not to use Qualcomm products in its latest smartphones.
Qualcomm CFO George Davis highlighted the impact of the loss of business from Apple: in fiscal Q1 2017, Qualcomm supplied around half of the modems used in iPhones, but by fiscal Q1 2018 the number had dropped to zero.
He added Qualcomm’s RF front end share in Apple flagships also dropped with the most recent iPhone launch.
Accordingly, revenue in Qualcomm’s fiscal Q1 2019 is expected to drop by between 13 per cent and 26 per cent year-on-year to a range between $4.5 billion and $5.3 billion.
But Qualcomm sees an upside coming from 5G. CEO Steve Mollenkopf said the company had already signed licensing agreements covering the technology with 20 customers, with “significantly more manufacturers in discussions for 5G agreements and amendments, positioning QTL for stability as the 5G transition gains momentum”.Subscribe to our daily newsletter Back