This is tough business especially with the Chinese as your main customer or in IDCC ‘s case potential customers and the Huawei renewal.
Qualcomm posts net loss, forecasts fall in next quarter's revenues
Wednesday 7 November 2018 | 22:57 CET | News
Qualcomm reported a net loss for its fiscal fourth quarter to September, hurt by the USD 2 billion paid to NXP for not completing their merger. Revenues were down 2 percent year-on-year to USD 5.8 billion, in line with the company's guidance and including partial payment of back licensing fees from one major customer. Qualcomm said underlying earnings were better than forecast and it expects to return to growth in adjusted EPS in the current quarter, despite a projected sharp fall in revenue.
While Qualcomm still has not received any licensing revenue from Apple due to their ongoing legal dispute, the company said it collected another USD 100 million in the past quarter, after USD 500 million in fiscal Q3, from the other, unnamed customer with which it's trying to negotiate a new licence. That is considered partial payment for licence fees due since 2017, and Qualcomm said it received another USD 100 million in fiscal Q1.
Licensing revenues were still down 6 percent year-on-year to USD 1.1 billion. The QCT division reported revenues flat at USD 4.6 billion, while MSM shipments rose 5 percent from a year ago and 17 percent on a sequential basis to 232 million.
The company also benefited from a USD 676 million gain from its settlement of competition violations with the Taiwan Fair Trade Commission during the quarter. This left the company with a net loss of USD 0.5 billion or USD 0.35 per share for the quarter, compared to a profit of USD 0.2 billion or USD 0.11 per share a year ago. On an adjusted basis, EPS was down 2 percent to USD 0.90.
Qualcomm ended the quarter with cash and marketable securities of USD 12.1 billion, down from USD 35.9 billion in June. It spent a total of USD 22 billion in Q4 on share buybacks and dividends and said it expects to complete the USD 30 billion share buyback programme by the end of fiscal 2019.
From the fiscal first quarter, Qualcomm will adopt new accounting standards on revenue recognition, which will accelerate royalty revenues by one quarter as they are recognised when sold. The company is also converting some of its foreign subsidiaries to US tax liability from this fiscal year. The tax changes will lead to a one-time gain in Q1 of USD 525-575 million.
Revenues in Q1 are expected to be down 13-26 percent year-on-year to USD 4.5-5.3 billion. That includes an estimated 18-26 percent fall in MSM shipments to 175-195 million, and 15-23 percent lower QTL revenues. EPS is estimated at USD 0.78-0.88. Adjusted EPS is expected to grow to USD 1.05-1.15 from USD 0.98 a year earlier, helped by the share buyback.
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