Qualcomm drops on disappointing guidance

Qualcomm Inc. CEO Steve Mollenkopf.

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Qualcomm reported revenue for its June quarter that was significantly lower than analyst expectations, as well as disappointing guidance for the September quarter on Wednesday.

The stock dropped as much as 5% in after-hours trading.

Here's how the company did versus expectations:

• Earnings: $0.80 per share, excluding certain items, vs $0.75 expected according to analysts polled by Refinitiv
• Revenue: $4.89 billion vs $5.08 billion expected

For the fiscal fourth quarter ending in September, Qualcomm said EPS would be between $0.65 and $0.75 per share (adjusted) on revenues between $4.3 billion and $5.1 billion. Analysts had been expecting EPS of $1.08 on revenue of $5.63 billion.

The Q3 numbers do not include a one-time payment from Apple totaling around $4.7 billion, or $3.23 per share, as part of a legal settlement between the two companies around chip licensing.

"In the third quarter of fiscal 2019, we recognized licensing revenues of $4.7 billion resulting from the settlement, consisting of a payment from Apple and the release of certain of our obligations to pay Apple and its contract manufacturers customer-related liabilities," Qualcomm said in its statement.

Qualcomm also added that Apple had paid Qualcomm licensing royalties during the quarter, which it had not for 2018 or the first two quarters of Qualcomm's fiscal 2019. Qualcomm said it would not start booking revenue from selling chipsets to Apple until the second half of 2020.

During the quarter ending June, federal courts issued an order ruling against Qualcomm in a case brought by the FTC related to its licensing business practices. Qualcomm said that it didn't believe the ruling materially impacted the company's licensing revenue.

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