Apple’s Manufacturers Join The Lawsuit Against Qualcomm

“If Apple hadn’t interfered with the licenses and instructed the contract manufacturers to take these actions the contract manufacturers would not be contesting the licenses now”, Qualcomm President Derek Aberle said of the dispute on the company’s conference call on Wednesday.

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

Responsible for much of the drop was the ongoing dispute with iPhone maker Apple, which is over the refusal of Apple to pay the royalties charged by Qualcomm on different technologies that Tim Cook the CEO at Apple believes Qualcomm did not have anything to do with and therefore is collecting monies for no reason.

However, on a year-over-year (yoy) basis, Qualcomm’s revenues declined 12%.

Adjusted profit in the current period may fall to 75 cents to 85 cents a share, less than the average analyst estimate for 91 cents.

Qualcomm’s patent-licensing business on cellular technology accounted for roughly 80% of the company’s pretax profit in 2016.

Editor’s Remarks: Qualcomm and Apple have been at legal loggerheads over intellectual property royalty payments since the beginning of the year.

As drones fill the sky, semi-autonomous cars fill the roads, gadgets like the Amazon Echo fill people’s homes, and other new technologies powered by Qualcomm’s products hit the market, you’d think things would be going great for the company.

Qualcomm had sued the four Apple contractors in May after they stopped paying royalties.

September quarter sales guidance, buoyed by healthy chip demand, is set at a range of $5.4 billion to $6.2 billion (down 13% to flat), above a $5.48 billion consensus at the midpoint. Earlier this month, Qualcomm asked the International Trade Commission to bar Apple from selling iPhones and iPads in the U.S. Earlier today, four of Apple’s contract manufacturers alleged that Qualcomm is violating U.S. antitrust laws. Qualcomm has said that its licensing agreements with the contract manufacturers are independent of Apple.

One of the largest markets in Europe, Germany is also a logistics hub for imports and distribution across the continent. These companies also claim that Qualcomm’s patent licenses are excessive in cost.

In the latest development, several Apple Inc. Qualcomm also ended the quarter with $37.8 billion in cash and equivalents, up from $28.9 billion in the previous quarter. But the company won’t back down-chief executive Steve Mollenkopf said on an earnings call that Qualcomm will “appropriately defend the tremendous value that our innovations bring to this industry”.

On a GAAP basis Qualcomm reported EPS of $0.58, including the company’s strategic initiatives segment and some share-based compensation, items related to acquisitions, tax and other items.