Qualcomm forecasts sales above estimates, settles dispute with Huawei

Yolanda Curtis
August 1, 2020

Analyst Charles King of Pund-IT Inc. told SiliconANGLE that Qualcomm's deal with Huawei could also offer some potential relief to other companies too.

In addition, Qualcomm announced the unexpected settlement of a long-running patent licensing dispute over patent fees with China's Huawei.

After adjusting for that onetime windfall, Qualcomm said, its fourth-quarter profit will come in at about $1.05 to $1.25 per share on revenue of $5.5 billion to $6.3 billion.

Wall Street analysts had forecast revenue of $4.8 billion and adjusted earnings of 70 cents per share. With the lump payment factored in, Qualcomm anticipates FQ4 revenue of $7.3 billion to $8.1 billion. Profit, excluding some items, will be $1.05 to $1.25 cents a share.

The smartphone industry, which has suffered declining unit shipments since 2016, is pinning its hopes for a rebound on 5G, which will bring faster data speeds for consumers and add connections and services to now stand-alone electronics. That's likely a reference to Apple's widely expected 5G-capable iPhone; Qualcomm a year ago replaced Intel as the 5G silicon vendor for the iPhone maker.

Huawei, which is still subject to U.S. government restrictions, trumped Samsung for the first time in the worldwide smartphone market in the second quarter, research Canalys said on Thursday. "And now we're heading into the second inflection point which is more global launches of 5G". Qualcomm's stock had gained 5.4% this year, trailing a general rally by semiconductor companies. Qualcomm reported third-quarter fiscal results on Wednesday. Bloomberg reports market analysts predicted the firm would report sales of $4.8 billion with profits of $0.70 per share. The company's market cap is now around $115.77 billion.

Through the deal, Huawei can get complete technology patents on 5G SoC (system on a chip). The company charges a percentage of the selling price of each handset, payable by phone makers regardless of whether they use its chips.

"As 5G continues to roll out, we are realizing the benefits of the investments we have made in building the most extensive licensing program in mobile and are turning the technical challenges of 5G into leadership opportunities and commercial wins", said Steve Mollenkopf, CEO of Qualcomm, in a statement.

It is still seeking to overturn a sweeping US antitrust decision against the company.

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