Legal fight with Apple hurts Qualcomm's results

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IANS | 20 Jul, 2017
Saying that its Q3 results were negatively impacted by Apple's contract manufacturers not paying royalties, chip giant Qualcomm on Thursday reported its revenue down 11 percent over the previous year.

The third quarter fiscal 2017 revenue stood at $5.37 billion, beating analyst estimates of $5.26 billion. Qualcomm's net income was down 40 percent (year-on-year) at $866 million.

"The third quarter of fiscal 2017 results were negatively impacted by actions taken by Apple's contract manufacturers, who did not fully report and did not pay royalties due on sales of Apple products," Qualcomm said in a statement.

The results were also impacted by "previously disclosed dispute with another licensee, who did not report or pay royalties due in the third quarter of fiscal 2017," the statement said.

"We expect these licensees will continue to take such actions in the future until the respective disputes are resolved," it added.

The global chip maker had filed a new patent infringement lawsuit against Apple a few months back and now expects 'out of court' settlement with the Cupertino-based iPhone maker.

Speaking at a US event this week, Qualcomm CEO Steve Mollenkopf said "those things tend to get resolved out of court and there's no reason why I wouldn't expect that to be the case here."

He was comparing the dispute with Apple to earlier fights Qualcomm has had with other tech companies that were settled out of court.

"We believe that we hold the high ground with regard to the dispute with Apple, and we have initiated new actions to protect the well-established value of our technologies," Mollenkopf said in the statement on Thursday.

Earlier in July, Qualcomm asked the US authorities to ban imports of some iPhone and iPad models.

Qualcomm filed a complaint with the US International Trade Commission, accusing Apple's iPhones and iPads of infringing six of its mobile patents.

Qualcomm said all iPhones and iPads that contain competing mobile communications chips should be barred from the country.

Apple responded to this, saying that the company had tried to negotiate before suing and that Qualcomm is abusing its position.

In April, Apple stopped paying royalties to contract manufacturers for phone patents owned by Qualcomm over an "unresolved issue".

Apple reportedly stopped paying royalties starting with devices sold during the March quarter.

Qualcomm is one of the world's biggest provider of mobile chips and derives revenue majorly from licensing that technology to hundreds of handset manufacturers and others.

Apple sued Qualcomm in January for nearly one billion dollars over royalties, with the Cupertino-based tech giant alleging the wireless chipmaker that it did not give fair licensing terms for its processor technology.