-Qualcomm Updates Financial Guidance for the Third Quarter of Fiscal 2017-
SAN DIEGO, April 28, 2017 — (PRNewswire) — Qualcomm Incorporated (NASDAQ: QCOM) today announced that it has been informed by Apple Inc. that Apple is withholding payments to its contract manufacturers for the royalties those contract manufacturers owe under their licenses with Qualcomm for sales during the quarter ended March 31, 2017. Apple has indicated it will continue this behavior until its dispute with Qualcomm is resolved."Apple is improperly interfering with Qualcomm's long-standing agreements with Qualcomm's licensees," said Don Rosenberg, executive vice president and general counsel of Qualcomm. "These license agreements remain valid and enforceable. While Apple has acknowledged that payment is owed for the use of Qualcomm's valuable intellectual property, it nevertheless continues to interfere with our contracts. Apple has now unilaterally declared the contract terms unacceptable; the same terms that have applied to iPhones and cellular-enabled iPads for a decade. Apple's continued interference with Qualcomm's agreements to which Apple is not a party is wrongful and the latest step in Apple's global attack on Qualcomm. We will continue vigorously to defend our business model, and pursue our right to protect and receive fair value for our technological contributions to the industry."
Third Quarter Fiscal 2017 Guidance Update
As a result of the above developments, we are updating our financial guidance for the third quarter of fiscal 2017 to exclude royalty revenues from Apple's contract manufacturers. The contract manufacturers may make some form of partial payment, but initial indications are that any payment would likely be insignificant. As a result of these actions, we are adjusting our financial guidance to assume that no payment is made, and therefore no revenues are recognized, in the quarter. This differs from our prior guidance, which considered a variety of payment scenarios (and related revenues) within the range, but did not include a scenario where no payment was made (and no revenues were recognized).
The following table summarizes GAAP and Non-GAAP guidance based on the current outlook.
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Qualcomm's Business Outlook Summary and Reconciliation | |||||
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Q3 FY16 Results (2) |
Prior Guidance Q3 FY17 Estimates |
Current Guidance Q3 FY17 Estimates | ||
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Revenues |
$6.0B |
$5.3B - $6.1B |
$4.8B - $5.6B | ||
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Year-over-year change |
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decrease 12% - increase 1% |
decrease 7% - 21% | ||
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GAAP diluted earnings per share (EPS) |
$0.97 |
$0.67 - $0.92 |
$0.52 - $0.62 | ||
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Year-over-year change |
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decrease 5% - 31% |
decrease 36% - 46% | ||
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Less diluted EPS attributable to QSI |
$0.00 |
$0.02 |
$0.02 | ||
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Less diluted EPS attributable to share-based compensation |
($0.13) |
($0.13) |
($0.13) | ||
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Less diluted EPS attributable to other items (1) |
($0.06) |
($0.12) |
($0.12) | ||
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Non-GAAP diluted EPS |
$1.16 |
$0.90 - $1.15 |
$0.75 - $0.85 | ||
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Year-over-year change |
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decrease 1% - 22% |
decrease 27% - 35% | ||
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(1) |
Our guidance for diluted EPS attributable to other items for the third quarter of fiscal 2017 is primarily attributable to acquisition-related items. |
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(2) |
The reconciliation between GAAP and Non-GAAP results for the prior period is included in the news release for that period. |
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Sums may not equal total due to rounding. | |
