Qualcomm is Expecting A Lot of Money From Apple in Its Settlement


 
 
02:20 05/04/2019











It was last month that tech beasts Qualcomm QCOM  and Apple AAPL  finally settled a long going dispute over how much Apple should pay Qualcomm for intellectual property required to connect to cellular networks.



Qualcomm CEO Steve Mollenkopf declined to answer questions about the settlement’s size during the time of the settlement, remarking, 'Well, a deal like this, there’s a lot of value back and forth, and it’s just best to keep it confidential.'



Well the details of the settlement were disclosed in Qualcomm's second quarter financial report. Qualcomm is now expecting Apple to pay between $4.5 billion and $4.7 billion in revenue.



The agreement included a one-time payment, a licensing deal between the two companies and Apple said it would be buying Qualcomm chips.



'While we continue to assess the accounting impacts of the agreements, our financial guidance for the third quarter of fiscal 2019 includes estimated revenues of $4.5 billion to $4.7 billion resulting from the settlement (which will be excluded from our Non-GAAP results), consisting of a payment from Apple and the release of our obligations to pay or refund Apple and the contract manufacturers certain customer-related liabilities,' Qualcomm stated.
Shares of Qualcomm have rallied over 40% since the settlement on April 16th while Apple stock also saw gains of over 5%, most related to the company's earnings report beating expectations.



Mollenkopf said during the earnings call, 'We are pleased to report another strong quarter. Our fiscal second quarter non-GAAP earnings of $0.77 per share exceeded the high end of our guidance range, driven by higher licensing revenues and stronger QCT margins.'

He added, 'As we look forward, the rest of the fiscal year will be impacted by a slower market for devices, particularly in China, upstream of the larger rollouts of 5G worldwide. Two weeks ago, we announced the global settlement of our disputes with Apple and its contract manufacturers.'



He further stated, 'We believe this settlement is a win for both companies and we are pleased with the result and pleased to have it behind us. Dave will provide more details on the financial impact of this settlement in his prepared remarks. But at a high level, this settlement includes two long-term agreements with Apple: a global patent license agreement and a multi-year chipset supply agreement. The settlement also includes a one-time payment from Apple to Qualcomm.'





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