Qualcomm lowered forecast for sales revenue for the quarter, including Christmas, falling below analysts’ expectations. This is the result of the loss of chip sales to Apple.
The chip maker also predicted that its earnings for the first fiscal quarter of 2019 would be above analysts’ projections. However, this better estimate is largely due to one-off tax benefits. The analysts forecast a profit of 0.45 USD per share.
Qualcomm is the world’s largest smartphone chip provider, however, faced the industry slowdown and the loss of its major customer, Apple. At the same time, the company faces ongoing challenges for its patent licensing model, where receives a share of the final price of each smartphone sold. But the headaches come both from antitrust regulators and from customers like Apple, who sued Qualcomm in connection with its practices.
The iPhone manufacturer has excluded Qualcomm chips from its new iPhone XS, XS Max and XR models released in September. Instead, it implemented chips from Intel.
Earlier this summer, Qualcomm has warned its shareholders that Apple is likely to make the move, but the effect was much faster than expected on Wall Street.
For the first fiscal quarter, which ends in December, the chip maker expects revenue of 4.5-5.3 billion USD and adjusted earnings ranging from 1.05 USD to 1.15 USD per share. The analysts forecast revenue of 5.57 billion USD at a revised profit of 0.95 USD per share.
The Chief Financial Officer of Qualcomm, George Davis, commented that about half of Apple’s chip purchases occurred during this quarter.
“Our forecast is for the sale of over 50 million units less in the quarter, all explained by the absence of Apple smartphone”, said George Davis. “That’s the difference”, added he. Davis argues that adjusted earnings per share will reach 1.05-1.15 USD per share.
Excluding some elements, Qualcomm has earned 0.90 USD per share in the fiscal fourth quarter (Q3 2018), which ended in September. It has surpassed analysts’ expectations of 0.83 USD per share. The revenues fell to 5.80 billion USD in the fiscal fourth quarter (Q3 2018), but are above the 5.52 billion USD forecast.
Qualcomm’s quarterly loss has reached 493 million USD, or 0.35 USD per share, compared to a profit of 168 million USD or 0.11 USD per share an year ago.