Legal woes causing concern for Qualcomm

Legal woes overshadow Qualcomm’s Q4 results

06 NOV 2014

Qualcomm said the “issues” it is facing in China have “tempered” its outlook for the coming year, as the company is also set for new regulatory probes in Europe and the US.

The US silicon giant said it “continues to cooperate” with China’s National Development and Reform Commission (NDRC), which is investigating the activities of its licencing arm. It said that it believes some licensees in the country “are not fully complying with their contractual obligations to report their sales of licensed products to us”, and that unlicensed companies may delay negotiations while the NDRC probe is ongoing.

In its annual report, Qualcomm also said that on 15 October the EC notified it that an investigation is being conducted related to “the sale and/or marketing of our baseband chipsets, including alleged conditions relating to the provision by us of rebates and/or other financial incentives”. It said that as this case is at an early stage, it is “difficult to predict the outcome or what remedies, if any, may be imposed”.

And on 17 September, the Federal Trade Commission told Qualcomm it is conducting an investigation which “concerns primarily our licensing business, including potential breach of FRAND [fair, reasonable and non-discriminatory] commitments”.

The news somewhat overshadowed what Steve Mollenkopf, Qualcomm’s president and CEO, described as “another year of record financial performance as our 3G/4G LTE multimode and other advanced technologies continue to enable the growth of wireless data around the world, driven by our broad chipset roadmap”.

For the fourth quarter (to 28 September), it reported a net profit of $1.89 billion, up 26 per cent year-on-year, on revenue of $6.69 billion, up 3 per cent. For the full year, net profit of $7.97 billion was up 16 per cent, on revenue of $26.49 billion, up 7 per cent.

Despite what looks like a solid performance, this was below analyst expectations which, coupled with the ongoing regulatory uncertainty, has upped the pressure on the company.

Looking forward, Qualcomm expects first quarter revenue to be between $6.6 billion and $7.2 billion, representing flat to 9 per cent growth.

“We are forecasting continued growth of global 3G/4G device shipments in calendar year 2015, particularly in emerging regions,” Mollenkopf said.

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Steve Costello

Steve works across all of Mobile World Live’s channels and played a lead role in the launch and ongoing success of our apps and devices services. He has been a journalist...More

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