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QCOM Stock Rises 10% in Pre-market, Qualcomm Reports Revenue of $4.9B in Q3, Enters Deal with Huawei

UTC by Teuta Franjkovic · 3 min read
QCOM Stock Rises 10% in Pre-market, Qualcomm Reports Revenue of $4.9B in Q3, Enters Deal with Huawei
Photo: Qualcomm / Facebook

Qualcomm reported net income of $845 million on revenue of $4.893 billion in Q3. Those figures dropped precipitously from a year ago when the company reported $2.15 billion of profits on revenue of $9.635 billion. It also announced a long-term patent agreement with Huawei.

Qualcomm Incorporated (NASDAQ: QCOM) announced its results for its fiscal third quarter ended June 28, 2020. QCOM stock jumped as much as 13% after hours on Wednesday and is 10% up today in the pre-market. It is attributed to the fact that Qualcomm reported fiscal Q3 earnings that beat expectations and announced a long-term patent agreement with Huawei, settling a major unanswered legal question for the company.

Earnings per share were 86 cents (non-GAAP), compared to 71 cents estimated. Revenue stood at $4.89 billion compared to $4.8 billion estimated. Earnings before taxes were $868 million while net income stood at $845 million.

Qualcomm Signing Partnership with Huawei

The company also said it had entered into a long-term patent agreement with Huawei, which will be a major vendor of 5G phones and network equipment. Qualcomm said it expects to record $1.8 billion in settlement payments from Huawei in the quarter ending in September. Qualcomm settled similar patent lawsuits with Apple Inc (NASDAQ: AAPL), a major handset customer, last year.

“With the signing of the Huawei agreement we are now entering a period in which we have multiyear license agreements with every major handset OEM,” Qualcomm CEO Steve Mollenkopf said on a call with analysts.

Also, Qualcomm noted it has lowered its fiscal fourth-quarter earnings-per-share target by more than 25 cents to account for a reduction in smartphone shipments due to the coronavirus outbreak. It said this reduction includes the impact of “the delay of a global 5G flagship phone launch.”

Will Apple 5G Be Delayed?

However, after the company reported its earnings, there came rumors that Qualcomm Q3 earnings report might indicate a delay for Apple’s (NASDAQ: AAPL) upcoming 5G iPhones, with the company accentuating a “partial impact from the delay of a global 5G flagship phone launch” for its fourth-quarter projections.

Be it as it may, Qualcomm’s chief financial officer Akash Palkhiwala hinted that the “delay likely wouldn’t be too long for the unnamed phone”, describing it as “a slight delay that pushes some of the units out from the September quarter to the December quarter for us.”

Apple and Qualcomm last year decided to finally make peace in their $4.5 billion settlement that saw Apple win back Qualcomm’s services as a 5G modem supplier for its products after years of legal battles over patent disputes. Apple is expected to introduce Qualcomm’s 5G modems in the 2020 iPhone lineup as its first products to support the next-generation networking technology.

Qualcomm said Wednesday that it expects global smartphone sales to fall by 15% over the next three months, due to the coronavirus.

Qualcomm, which sells many of the smartphone processors and radios that go into the world’s smartphones, said that the coronavirus would slow sales for its current fourth fiscal quarter.

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