Qualcomm 1Q18 earnings come as it notches licensing deal with Samsung
For the quarter ending in December, chipmaker Qualcomm has beaten market expectation despite recording a $5.95 billion net loss.
Overall revenues for the first fiscal quarter of 2018 were at $6.07 billion, marginally improved from last year. It would have recorded better operating profits and net income figures if it weren’t for the fact that the company took two impairments: a $1 billion fine from the European Commission and a $6 billion charge in US taxes after reforms lowered the rate for repatriation.
Hardware and service sales increased by 14 percent to $4.7 billion. Analysts say that Chinese 4G smartphone shipments declined by 11 percent on an annual basis in 2017. CDMA sales, mostly in the premium US market, countered the gap. It offsets a 27 percent drop in licensing revenues as it navigates antitrust accusations (mostly on the CDMA side of its patented technologies) from various governments as well as Apple.
On a positive note in licensing, the San Diego-based company has entered into a multi-year cross-licensing agreement with Samsung and is working on an expansion of its strategic relationship with the chaebol working on 5G network materials. With the agreement, Samsung will also pull away from its involvement against Qualcomm’s appeal of an $800-million-plus fine from the Korean Fair Trade Commission over anti-competition claims.
Investors are wary of what Qualcomm will have to face in its forward path as it tries to fend off a hostile takeover from competitor Broadcom while attempting to close its acquisition of NXP Semiconductors.