Qualcomm beats Q1 estimates despite quarterly loss on $6 billion tax charge

The company's loss was also related to a $1.2 billion fine from the European Commission related to Apple payments.
Written by Natalie Gagliordi, Contributor
(Image: Corinne Reichert/ZDNet)

Qualcomm published better-than-expected third quarter financial results Wednesday amid ongoing legal tensions with Apple and efforts to ward off an unsolicited takeover effort by Broadcom.

The tech giant reported a net loss of $5.95 billion, or $4.03 per share, mostly due to a $6.0 billion charge related to recent US tax reform. The company also paid a $1.2 billion charge to the European Commission for Apple payments.

Qualcomm said revenue was $6.1 billion, up one percent year over year, with non-GAAP earnings of 98 cents per share. Wall Street was looking for earnings of 91 cents per share with $5.93 billion in revenue.

For the current quarter, Qualcomm expects earnings from 65 cents to 75 cents a share with $4.8 billion to $5.6 billion in revenue. Wall Street is expecting earnings of 85 cents a share on revenue of $5.58 billion.

Qualcomm's epic struggle with Apple started in January, when Apple filed a lawsuit that accused the semiconductor giant of overcharging for chips. As the legal battle escalated, reports emerged that Apple was designing its iPhone and iPads for 2018 without any Qualcomm components.

The Apple dispute has put significant pressure on Qualcomm Technology Licensing (QTL), Qualcomm's licensing division, which accounts for a significant portion of Qualcomm's earnings. The company's other business segment, QCT (Qualcomm CDA Technologies), accounts for most of its revenue.

Qualcomm did not release QCT numbers for the recent quarter, but noted that in Q1 2017, the company received $740 million in QTL revenues related to Apple products. For Q1 2018, QTL revenue was $1.3 billion, down 28 percent year over year. Qualcomm said MSM shipments were 237 million, an increase of 9 percent annually.

However, Qualcomm and Samsung announced today that they have expanded their global patent cross-license agreement covering mobile devices and infrastructure equipment. The companies also announced an expanded multi-year strategic agreement in various technology areas, including 5G.

As part of the agreement, Samsung said it will withdrawl its intervention in Qualcomm's appeal of of what the Korean Fair Trade Commission called "excessive" licensing fees.

Meanwhile, Qualcomm continues to shoot down Broadcom's $130 billion hostile takeover effort. Most recently, Broadcom has focused on wooing Qualcomm investors directly in the hopes of swaying opinions and opening communication to make the merger a reality.

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