Qualcomm’s legal dispute with Apple lingers while Qualcomm’s profit drops

Qualcomm’s legal fight with Apple tells on the company’s financials. Qualcomm, a chipmaker company, based in San Diego, California has its revenue down 11% smashing estimates of $5.26 billion by the analyst. However, the major hit was evident in the chipmaker’s net income – at $866, down 40% year over year with 58 cents per share as earnings.

Qualcomm’s statement

Qualcomm’s CEO, Steve Mollenkopf said that the company delivered results more than expected in its semiconductor business this quarter, causing the rise of EPS above the center of their expectations. He added that Qualcomm’s technologies and products keep enabling the smartphone industry globally. And the firm keeps expanding into many new categories of goods such as mobile computing, automotive and IoT. As such, they hold a higher ground about the firm’s dispute with Apple. He added that new actions have been initiated to protect the existing values of Qualcomm’s technologies.

However, Qualcomm admitted that its financials for the third quarter were affected mainly by the failure of royalty payments for the sales of iPhone by Apple’s contract manufacturer. Apart from Apple, Qualcomm was meant to make big payouts in the third quarter – $927 million was paid to Korea Free Trade Commission fine while $940 million was paid to BlackBerry for settlement of a royalty dispute.

According to Stacy Rasgon, a Bernstein Research analyst, Qualcomm’s estimates for the coming few quarters will be very messy.

A highlight of Apple’s legal dispute with Qualcomm

The fights started in January when Apple filed a lawsuit against Qualcomm indicating that the renowned chipmaker has remained bent on charging royalties for technologies they don’t use. Qualcomm is popular for its chipmaking which makes it possible for many phones to hook up to networks across the globe. However, its strategy of licensing its technology accounts for about two-thirds of its profit.

In a countersuit filed by Qualcomm in April, it claimed that Apple tried to suppress the company with significant regulatory attack in collaboration with Samsung while denying Apple’s claim. The chipmaker in the lawsuit also said that Apple gave out false statements that are misleading to government regulators in a bid to have the act against Qualcomm.

The most recent in the dispute between these two companies is that four manufacturers of Apple have joined hands to throw up allegations against Qualcomm stating their violations of the U.S. antitrust law. The four contract manufacturers are Compal, Foxconn, Pegatron, and Wistron – Qualcomm sued these manufacturers in May for failure to pay royalties.

However, Mollenkopf said at a conference in Aspen, Colorado that such disputes are resolved not in court, and he possibly sees the same thing apply in their case with Apple.