Qualcomm reports decline in third quarter earnings amid Apple legal battle

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The US case is part of a larger argument between Qualcomm and Apple about the chipmakers licensing model and is the latest in a number of civil claims files by the companies against each other and their supply chain.

While Apple does not have any direct contracts with Qualcomm, its manufacturing partners do, and the fees that they owe to Qualcomm is paid by Apple, Bloomberg reported. The difference is that the ITC complaint is limited to iPhones without a Qualcomm chip and the German lawsuits want an import stop on all iPhones.

The hit is particularly painful since QTL is normally incredibly profitable, often bringing in more EBT than the Qualcomm CDMA technologies (QCT) chip business, and on a smaller revenue base, to boot.

Earlier this year, Qualcomm cut its earnings estimates for the third quarter due to its ongoing litigation with Apple.

Apple first sued the chipmaker in January, accusing it of overcharging for chips and refusing to pay some $1 billion in promised rebates. Back then, Qualcomm's president had said "despite Apple's claims against Qualcomm, Apple suppliers remain contractually obligated to pay royalties to Qualcomm under their license agreements with us, including for sales of iPhones to Apple".

For what it's worth, Qualcomm CEO Steve Mollenkopf said earlier this week that he can see a settlement with Apple occurring outside of the courtroom.

Bloomberg said that the patents, for ways to transmit information without draining battery life, are the European counterparts to those that are part of a case Qualcomm filed with a trade agency in Washington seeking to halt imports of Apple products into the USA market. On the April earnings call, which was largely dominated by discussion of the Apple situation, Qualcomm disclosed an additional dispute with another licensee.

Qualcomm's German lawsuits only concern two patents, according to its general counsel, Don Rosenberg.

Qualcomm forecast adjusted profit of US$0.75 to US$0.85 per share and revenue of US$5.4bn to US$6.2bn for the fourth quarter.

Four Apple contractors, including Foxconn parent Hon Hai Precision Industry Co and Wistron Corp, filed a lawsuit against Qualcomm on Tuesday, alleging that it had violated two sections of a U.S. antitrust law.

In a statement via Reuters, Theodore Boutrous, a lawyer who represents the four named companies, said the suit from Qualcomm was strictly retaliatory and meant to be a response to Apple.

Reviewing the results, Raymond James's McCourt writes that "Qualcomm is either taking massive share with China OEMs, or not losing as much incremental share at Apple".