Qualcomm posts 89% drop in net income in Q4 FY2017

The San Diego-based chip maker is currently engaged in a legal battle with Apple and owed billions in charges in cases determined by fair trade commissions in Taiwan and Korea, resulting in huge earnings declines for the period ending Sept. 24, 2017.    Cell phone chip technology provider Qualcomm posted a net income of $200 million for its fiscal fourth quarter ending Sept. 24, 2017, an 89 percent drop compared to the $1.6 billion in the same period last year.
   The company’s revenues also slid 5 percent to $5.9 billion over last year, with diluted earnings per share plunging 90 percent to $0.11. The company’s profits were largely impacted by a $778 million charge for the fine imposed by the Taiwan Fair Trade Commission (TFTC), and Apple Inc.’s withholding of patent royalties on iPhones and iPads. 
   The company’s fiscal year revenues dropped 5 percent to $22.3 billion, down from the $23.6 billion in fiscal year 2016. Fiscal year results were also impacted by an $868 million charge for the fine imposed by the Korea Fair Trade Commission (KFTC) in the first quarter of fiscal 2017 and a $974 million reduction to revenues related to the BlackBerry arbitration decision in the second quarter of fiscal 2017. 
   Regulators in some countries have determined Qualcomm uses its dominant position in chips to disadvantage competitors and charge exorbitant royalties, resulting in fines and charges to the chip maker. Qualcomm’s CEO Steve Mollenkopf is positive that the company will turn a profit in coming years, however.
   “Our fourth quarter and fiscal 2017 results reflect continued product leadership and profitability improvement in our semiconductor business, including strength in adjacent opportunities outside mobile,” said Mollenkopf. “We continue to see strong growth trends for global 3G/4G device shipments and are focused on protecting the established value of our technologies and inventions. We are leading the industry to 5G and are well positioned with our product and technology leadership to continue our expansion into many exciting new product categories, such as automotive, mobile computing, networking and the Internet of Things.”
   Looking ahead, Qualcomm expects revenues to continue to decrease 5- to 8 percent in 2018. The company stated that, “Our financial guidance for the first quarter of fiscal 2018 excludes QTL [Qualcomm’s licensing business] revenues related to the sale of Apple products by Apple’s contract manufacturers, as well as the sale of products by the other licensee in dispute as we expect the recent actions taken by these licensees will continue until the respective disputes are resolved.” Qualcomm is also looking forward to its pending acquisition of NXP Semiconductors to broaden its scope in the international market, particularly in the automotive industry.