Qualcomm earnings top estimates on surge in modem chip sales

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(Reuters) – Chipmaker Qualcomm Inc’s (QCOM.O) earnings and revenue exceeded Wall Street forecasts for the first fiscal quarter as demand surged for its chips used in smartphones and cars, making up for a fall in licensing revenue.

The results come as the San Diego-based chipmaker tries to rebuff a $103-billion takeover approach by Broadcom Ltd (AVGO.O) and close its long-pending $38-billion deal to buy automotive chip maker NXP Semiconductors (NXPI.O).

Qualcomm is trying to convince shareholders that it can boost earnings as a standalone company through a $1 billion cost reduction plan and by resolving license disputes including a high-profile patent battle with Apple Inc (AAPL.O).

But its earnings and revenue forecasts for the ongoing March quarter were well below what analysts were expecting, sending Qualcomm shares slightly lower in after-hours trading on Wednesday.

Qualcomm expects $4.8 billion to $5.6 billion in second-quarter revenue and adjusted earnings per share of 65 cents to 75 cents. Analysts had estimated revenue of $5.58 billion and earnings of 85 cents per share, according to Thomson Reuters I/B/E/S.

Revenue at Qualcomm’s CDMA technologies unit rose 13 percent to $4.65 billion in the first quarter ended Dec. 24. The business makes modem chips for phones as well as products for connected devices including cars and speakers.

The licensing business recorded a 28 percent fall in revenue to $1.30 billion, weighed down by the Apple dispute.

Apple sued Qualcomm last January, accusing it of overcharging for chips and of refusing to pay some $1 billion in promised rebates.

“We remain open to finding a path to resolution (with Apple),” Qualcomm Chief Executive Steve Mollenkopf said on a call with analysts.

Qualcomm posted a net loss of $5.95 billion compared to a profit of $682 million a year earlier, reflecting a $6 billion one-time charge because of new U.S. tax laws and a $868 million charge for a fine imposed by the Korea Fair Trade Commission.

Excluding one-time items, Qualcomm earned 98 cents per share, topping analysts’ average estimate of 91 cents, according to Thomson Reuters I/B/E/S.

Revenue rose 1.2 percent to $6.07 billion and exceeded analysts’ estimates of $5.93 billion.