Qualcomm Pegs Payment From Apple at $4.5 Billion to $4.7 Billion

Qualcomm will book a one-time payment of $4.5 billion to $4.7 billion next quarter from its settlement with Apple in a patent battle, the mobile chip maker said Wednesday as it reported its quarterly earnings.

It was the first time investors got a look at how the agreement will help Qualcomm’s bottom line, and the company’s shares fell about 3 percent in after-hours trading. The stock had been up more than 50 percent in recent weeks, reflecting investor relief at the deal. However, Qualcomm’s forecasts suggested that Apple’s licensing fees will not substantially increase revenue as Apple catches up on royalties it didn’t pay while the two companies were feuding.

Excluding that payment, Qualcomm estimated $4.7 billion to $5.5 billion in revenue in the next period, its fiscal third quarter, with a midpoint slightly below the $5.29 billion analysts had been expecting, according to IBES data from Refinitiv.

“We see a pause ahead of a 5G launch,” Cristiano Amon, Qualcomm’s chip chief, said on a conference call with investors, referring to the next generation of mobile networks, which will roll out this year and next.

The settlement with Apple, which includes a six-year patent license and a chip supply agreement, is expected to generate $2 per share in additional earnings, Qualcomm has said. Financial details have not been disclosed, but the deal is expected to help Qualcomm regain the pre-eminent mobile chip position it held in the early 2010s.

Apple said Tuesday that its gross margin guidance, which was largely unchanged from previous quarters, included the Qualcomm settlement. Taken together, the two disclosures suggest that the patent licensing deal had little short-term financial impact.

For the most recent quarter, which ended in March, Qualcomm posted net income of $663 million, or 55 cents a share, up from $330 million, or 22 cents a share, a year earlier.

Revenue fell to $4.88 billion, but beat analysts’ estimates of $4.80 billion.

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