By Sonam Rai
(Reuters) – Qualcomm Inc’s fourth-quarter profit and revenue beat market expectations as strength in its smartphone chips business was complemented by demand for chips used in automobiles and for the Internet of Things (IoT).
Qualcomm, which has been fighting a legal battle on many fronts with Apple Inc, said revenue from areas other than smartphones was more than $3 billion in its latest fiscal year, up more than 25 percent from last year.
Revenue from Qualcomm’s chip unit, which supplies both Android smartphone makers and Apple, rose 13 percent in the latest quarter. Licensing revenue, which includes royalties mostly from Apple, sank 36 percent.
Reuters reported earlier this week that Apple would drop the Qualcomm’s chips altogether from its iPhones and iPads from next year, the latest salvo in a longstanding dispute between the two companies.
Apple sued Qualcomm in January, accusing it of overcharging for chips and of refusing to pay some $1 billion in promised rebates. Qualcomm also sued some Apple contract manufacturers in April over royalty payments and is trying to ban the sale of iPhones in China.
“We really try to compartmentalize our engagement with Apple … (and) we do have a lot of engagement with the company and we do speak in our engage on a daily basis with them across multiple areas,” Chief Executive Steve Mollenkopf told analysts on a conference call.
Qualcomm continues to exclude from its forecast revenue related to the sale of Apple products by the iPhone maker’s contract manufacturers as well as the another licensee in dispute.
It forecast current-quarter revenue of $5.5 billion to $6.3 billion and adjusted earnings of 88 cents to 95 cents per share.
Analysts were expecting revenue of $5.90 billion and a profit of 90 cents per share, per Thomson Reuters I/B/E/S.
While Qualcomm and Apple would be better off with each other, Qualcomm will do just fine even if that’s not the case, Moor Insights & Strategy analyst Patrick Moorhead said.
Qualcomm also reported better-than expected profit and sales for the fourth quarter, despite earnings tumbling nearly 90 percent due to a $778 million charge related to a fine imposed by the Taiwan Fair Trade Commission for anti-trust violations.
The company’ adjusted earnings of 92 cents per share beat estimates of 81 cents. Revenue fell 4.5 percent to $5.91 billion, but topped estimates of $5.80 billion. (http://bit.ly/2z5MwMB)
Its shares were marginally higher in after-hours trading.
(Reporting by Sonam Rai in Bengaluru; Editing by Savio D’Souza)