Thursday, 29 June 2017

Apple withholds Qualcomm royalties

By Nick Wood, Total Telecom
Tuesday 02 May 17

Chip maker cuts fiscal Q3 guidance; accuses iPhone maker of interfering with licensees.

Qualcomm has lowered its fiscal third quarter revenue and earnings forecast after revealing that Apple is withholding royalty payments to suppliers that use Qualcomm's patented technology. "Apple has now unilaterally declared the contract terms unacceptable…

Qualcomm has lowered its fiscal third quarter revenue and earnings forecast after revealing that Apple is withholding royalty payments to suppliers that use Qualcomm's patented technology.

"Apple has now unilaterally declared the contract terms unacceptable; the same terms that have applied to iPhones and cellular-enabled iPads for a decade," said Don Rosenberg, Qualcomm's general counsel, in a statement late last week.

As a result of the withheld payments, Qualcomm now expects fiscal Q3 revenue to decline by 7%-21% year-on-year to between $4.8 billion and $5.6 billion (€4.4 billion and €5.1 billion).

That compares to a previous guidance of between positive 1% and negative 12%, or $5.3 billion-$6.1 billion.

Earnings per share are expected to come in at $0.52-$0.62, down from a previous forecast of $0.67-$0.92.

The companies became embroiled in a dispute when Apple sued Qualcomm in January for $1 billion, accusing the mobile chip maker of operating an abusive licensing model designed to extract excessive royalties.

Apple claims Qualcomm also illegally double-dips, by selling cellular chipsets then separately licensing the associated intellectual property.

Qualcomm filed a countersuit in April, alleging that the iPhone maker made false statements to regulators, and interfered with agreements between Qualcomm and its licensees.

"Apple's continued interference with Qualcomm's agreements to which Apple is not a party is wrongful and the latest step in Apple's global attack on Qualcomm," said Rosenberg last week. "We will continue to vigorously defend our business model, and pursue our right to protect and receive fair value for our technological contributions to the industry."

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