Qualcomm generated $ 9.6 billion in revenue in the third quarter of 2019, up 93 percent from the prior year. However, $ 4.7 billion of this comes from a one-time payment by Apple. Qualcomm expects a significant decline in sales in the coming quarter.
Apple's agreement with Qualcomm on modems and licenses, which will continue until at least 2025, will see Qualcomm increase its revenue by $ 4.7 billion in the third quarter. This puts the one-time payment at the upper end of Qualcomm's forecast for the second fiscal quarter.
Qualcomm's third quarter of 2019 is already characterized by a one-time payment, sometimes in favor of Qualcomm, sometimes at the expense of the company. Although Apple's payment provides for a significant plus, in parallel, the company but had to pay $ 2.5 billion under an agreement to the US tax authority IRS. Another US $ 275 million went to the European Commission for the alleged abuse of a dominant position in 3G times. In addition, Qualcomm has taken a total of $ 800 million with various license agreements with Huawei. Restructuring at Qualcomm, however, led to a loss of $ 112 million.
While taking into account all these factors, a turnover of 9.6 billion US dollars, the coming fourth quarter should again be much more restrained. Qualcomm then expects sales of $ 4.3 billion to $ 5.1 billion, a decline of 12 percent to 26 percent. Net income for the quarter was $ 2.1 billion.
Qualcomm sells fewer chips
With 156 million chips sold, including SoCs and modems, Qualcomm's QCT division sold 22 percent fewer chips than last year. The division's sales are down 3.5 percent to $ 4.087 billion, down 13 percent. According to Qualcomm, the chip business is expected to slump 31 percent to 40 percent in the coming quarter. The license business of the QTL division has also shrunk by 10 percent. $ 1,292 billion last quarter compared with $ 1,443 million a year ago. In the fourth quarter, Qualcomm expects licenses to drop by 10 percent to 8 percent.
With 5G the money should flow again
In the difficult LTE business, as Qualcomm itself has to admit, Qualcomm still has a solid quarter, according to CEO Steve Mollenkopf. The focus and a little bit of hope, however, puts Qualcomm fully into 5G. According to Mollenkopf, the so-called “design wins”, ie the commitments of, for example, smartphone manufacturers to use 5G components from Qualcomm, have doubled in the last three months. The boss sees Qualcomm very well positioned, especially for the beginning of 2020. Until then, however, Qualcomm will have to overcome a dry spell.