Qualcomm's profit forecast disappoints as Apple battle takes toll

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‍Qualcomm forecast fourth-quarter profit below analysts' estimates as the company's escalating patent battle with Apple continues to take a toll on its licensing business.

Shares of the company were down 2.3 percent at 55.40 US dollars after the bell on Wednesday.

The chipmaker also reported a steep fall in third-quarter profit as Apple's contract manufacturers withheld royalties that they were expected to pay to Qualcomm.

The iPhone maker sued Qualcomm earlier this year, accusing it of overcharging for chips, and had asked its contract manufacturers to withhold license payments from the company while the dispute played out.

A Qualcomm sign is pictured at one of its many campus buildings in California. /Reuters Photo

"We believe that we hold the high ground with regard to the dispute with Apple," Qualcomm Chief Executive Steve Mollenkopf said in a statement.

Qualcomm forecast adjusted profit of 75 cents to 85 cents per share and revenue of 5.4 billion US dollars to 6.2 billion US dollars for the current quarter.

The company said the forecast excluded licensing revenue related to the sale of Apple products by contract manufacturers as well as the other unnamed licensee in dispute.

Analysts were expecting an adjusted profit of 90 cents per share and revenue of 5.48 billion US dollars, according to Thomson Reuters I/B/E/S.

"(Forecast) is pretty strong on the revenue front... the chip business is looking good especially in China, where it is getting pretty good traction with Chinese manufacturers," Edward Jones analyst Dave Heger said.

The battle between Apple and Qualcomm has impacted the whole chip making industry. /VCG Photo

Revenue from its Qualcomm CDMA Technologies (QCT) unit, which includes its chip business, rose five percent to 4.05 billion US dollars. In contrast, revenue from its licensing business fell 42.5 percent to 1.17 billion US dollars.

Qualcomm did not provide any metrics related to device sales due to the dispute with Apple's contract manufacturers and the other licensee.

Net income attributable to the company fell to 866 million US dollars, or 58 cents per share, in the third quarter ended June 25 from 1.44 billion US dollars, or 97 cents per share, a year earlier.

(Source: Reuters)