Summary
QUALCOMM INC/DE (QCOM) reported a significant decline in revenue and net income for the third quarter of fiscal year 2017 compared to the prior year. Total revenues decreased by 11% to $5.4 billion, and net income attributable to Qualcomm dropped by 40% to $866 million. This performance was primarily driven by a sharp decrease in licensing revenues, which fell by 42% to $1.25 billion. This decline was largely attributed to royalty disputes with key customers, notably Apple's contract manufacturers, and the impact of the BlackBerry arbitration settlement. Despite the revenue challenges, the company's equipment and services segment showed growth, increasing by 6% to $4.12 billion, mainly due to an increase in RFFE products from the new RF360 Holdings joint venture and connectivity shipments. The company also raised $11 billion in debt in May 2017 to help finance the proposed acquisition of NXP Semiconductors N.V., significantly increasing its long-term debt and altering its liquidity profile. Investors should monitor the resolution of the ongoing disputes with Apple and other licensees, as well as the progress and integration of the NXP acquisition.
Financial Highlights
52 data points| Revenue | $5.36B |
| Cost of Revenue | $2.49B |
| Gross Profit | $2.87B |
| R&D Expenses | $1.39B |
| SG&A Expenses | $710.00M |
| Operating Expenses | $4.60B |
| Operating Income | $758.00M |
| Interest Expense | $133.00M |
| Net Income | $856.00M |
| EPS (Basic) | $0.58 |
| EPS (Diluted) | $0.57 |
| Shares Outstanding (Basic) | 1.48B |
| Shares Outstanding (Diluted) | 1.49B |
Key Highlights
- 1Total revenues declined 11% year-over-year to $5.4 billion in Q3 FY17.
- 2Net income attributable to Qualcomm decreased by 40% to $866 million.
- 3Licensing revenues experienced a significant drop of 42% to $1.25 billion, impacted by royalty disputes with Apple's contract manufacturers and the BlackBerry arbitration.
- 4Equipment and services revenues grew 6% to $4.12 billion, driven by RFFE products and connectivity shipments.
- 5The company issued $11 billion in unsecured notes in May 2017, substantially increasing its long-term debt to fund the NXP acquisition.
- 6Cash and cash equivalents increased significantly to $14.9 billion, largely due to the recent debt issuance.
- 7The company is facing multiple ongoing legal proceedings and regulatory investigations globally, including disputes with Apple and regulatory actions in Korea and the EU.