Qualcomm Q3 beats estimates, resolves Huawei patent dispute
Qualcomm Incorporated has announced results for its fiscal third quarter ended June 28, 2020 with revenues of $4.9 billion and GAAP EPS of $0.74, Non-GAAP EPS of $0.86.
“As 5G continues to roll out, we are realizing the benefits of the investments we have made in building the most extensive licensing program in mobile and are turning the technical challenges of 5G into leadership opportunities and commercial wins,” said Steve Mollenkopf, CEO of Qualcomm Incorporated. “We delivered earnings above the high end of our range, continued to execute in our product and licensing businesses and entered into a new long-term patent license agreement with Huawei, all of which position us well for the balance of 2020 and beyond.”
Qualcomm entered into a settlement agreement, as well as a new long-term, global patent license agreement with Huawei, including a cross license granting back rights to certain of Huawei’s patents, covering sales beginning January 1, 2020.
Looking forward financial guidance for the fourth quarter of fiscal 2020 includes estimated QTL revenues for royalties due on sales made by Huawei in the September 2020 quarter.
It also includes estimated revenues of approximately $1.8 billion related to amounts due from Huawei under the settlement agreement (which are incremental to amounts previously paid under two interim agreements) and estimated amounts due for the March 2020 and June 2020 quarters under the new global patent license agreement. This amount will be excluded from Non-GAAP results.
Qualcomm’s guidance for the fourth quarter of fiscal 2020 includes an impact of greater than ($0.25) to EPS attributable to a planning assumption of an approximate 15% year-over-year reduction in handset shipments due to COVID-19, including a partial impact from the delay of a global 5G flagship phone launch. However, Qualcomm contends that the actual impact may differ materially due to the challenging economic environment and highly uncertain effects of COVID-19.