Qualcomm’s profit slumps amid Apple battle

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(Reuters) – Qualcomm Inc (QCOM.O) reported a 40 percent slump in quarterly profit as its escalating patent battle with Apple Inc (AAPL.O) took a toll on its business.

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

The chipmaker said its results took a hit as Apple’s contract manufacturers did not pay royalties due on sales of Apple products.

There has been long-running tension between the company and the iPhone maker over Qualcomm’s practice of taking a cut of the total price of the phone in exchange for modem chips, which connect phones to wireless networks.

Apple Inc (AAPL.O) first sued the chipmaker in January, accusing it of overcharging for chips and refusing to pay some $1 billion in promised rebates.

Since then both companies have filed a series of lawsuits against each other.

Qualcomm’s patent-licensing practices have also come under scrutiny from governments across the world and other customers.

The company said third-quarter results included a reduction in operating cash flow due to a $940 million payment to BlackBerry Ltd (BB.TO) and a $927 million payment related to the Korea Free Trade Commission (KFTC) fine, in addition to the payments withheld by Apple to its contract manufacturers.

Qualcomm forecast current-quarter adjusted profit of 75 cents to 85 cents per share and revenue of $5.4 billion to 6.2 billion.

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

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

Revenue fell 11.1 percent to $5.4 billion. (bit.ly/2uAg96t)

Excluding items, the company earned 83 cents per share. Analysts had expected a profit of 81 cents per share.