Qualcomm Just Surprised Wall Street With Its Earnings

Qualcomm shares rose higher in after hours trading on Wednesday after the company released better than expected second fiscal quarter earnings that beat analyst expectations.

The stock saw a 2% climb after the market closed when the company reported adjusted EPS of $1.34 a share excluding items, compared to the $1.19 per share that was expected by Thomson Reuters consensus.

Revenue came in at $5.99 billion versus the $5.89 that was expected and Q3 adjusted EPS guidance was in th range of 90 cents a share to $1.15 a share versus the $1.09 a share expected by Thomson Reuters consensus.

Revenue for Q3 is expected in the range of $5.3 billion to $6.1 billion compared to the $5.94 billion expected Thomson Reuters consensus.

Looking ahead, Qualcomm warned that a dispute with Apple could affect its outlook.

The company said: Apple’s contract manufacturers reported, but underpaid, royalties in the second quarter of fiscal 2017. However, our revenues were not negatively impacted as the contract manufacturers acknowledged the amounts are due and the underpayment was equal to the amounts that Qualcomm has not paid Apple under our Cooperation Agreement that are currently in dispute. The Cooperation Agreement expired December 31, 2016. It is not clear whether Apple’s contract manufacturers will underpay royalties owed under their contracts with us in the third quarter of fiscal 2017, which could have a negative impact on our financial results. Our guidance range for fiscal third quarter EPS is wider than our typical practice primarily due to this uncertainty.

Apple has a $1 billion lawsuit against the company arguing that Qualcomm charges “at least five times more in payments than all the other cellular patent licensors we have agreements with combined.”

“We will continue to protect the value of our technologies, which enables today’s robust mobile communications ecosystem, and invest in R&D that will drive the leading edge of mobile computing and connectivity for decades to come — focusing on areas where our technologies will have the most impact and generate the best returns,” said Steven Mollenkopf in a statement on Wednesday.

Disclaimer: We have no position in Qualcomm, Inc. (NASDAQ: QCOM) and have not been compensated for this article.