Monday, 03 August, 2020

Qualcomm forecasts sales above estimates, settles dispute with Huawei

Qualcomm Shares Rise on Strong Forecast Huawei Agreement Qualcomm expects phone sales to dip by 15 percent because of COVID
Cecil Davis | 01 August, 2020, 08:25

"We delivered earnings above the high end of our range, continued to execute in our product and licensing businesses and entered into a new long-term patent license agreement with Huawei, all of which position us well for the balance of 2020 and beyond", Mollenkopf added.

Huawei previously paid some royalties to Qualcomm while negotiations were ongoing in a dispute dating back more than two years. Qualcomm had projected $4.4 billion to $5.2 billion, while analysts expected about $4.81 billion.

Reuters reported that the 5G smartphone vendor in question was believed to be Apple.

The news sent Qualcomm shares up almost 12 percent in extended after-hours trading. The company has said it's the first to field 5G parts and aims to gain back market share that was eroded as the previous 4G network technology matured and its customers began to look elsewhere.

Huawei, which is still subject to USA government restrictions, trumped Samsung for the first time in the worldwide smartphone market in the second quarter, research Canalys said on Thursday.

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By the numbers, Qualcomm raked in almost $4.9 billion in revenue during last quarter, for a profit of $982 million, both almost identical to the amounts it earned in the same quarter a year ago. Qualcomm specified the outbreak had prompted a delay in the launch of a "global 5G flagship".

In addition to Huawei, Qualcomm has a relationship with Apple and is again supplying chips to the company after a legal battle past year. Qualcomm now has more than 660 devices announced or in development with its 5G Snapdragon semiconductors, up from 375 devices in March. It also also shows deep connections between global technology companies in the 5G era, despite conflicts between China and the USA, they said.

Qualcomm reported that it reached an agreement with Huawei over patent licensing, which netted the silicon vendor an immediate $1.8 billion in payments from the Chinese company. Earnings are forecast at $2.12 to $2.32 per share.

Revenue excluding certain items will be $5.5 billion to $6.3 billion in the period ending in September, the San Diego-based company said Wednesday in a statement.

Watch Qualcomm trade live on Markets Insider. Wall Street was expecting the company to report earnings of just 71 cents per share on revenue of $4.81 billion. Its share price ended Wednesday at $93.03 but surged to $103.78 in extended trading.