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Chinese phone makers, licensing business drive Qualcomm beat

Key Points
  • Qualcomm Inc beat analysts' expectations for fourth-quarter revenue and profit.
  • Results were helped by demand from Chinese smartphone makers targeting emerging markets and a newer licensing model for its wireless technology that has soothed relations with some big customers.
Steve Mollenkopf, CEO of Qualcomm.
Adam Jeffery | CNBC

Qualcomm beat analysts' expectations for fourth-quarter revenue and profit on Wednesday, helped by demand from Chinese smartphone makers targeting emerging markets and a newer licensing model for its wireless technology that has soothed relations with some big customers.

Shares of the company rose 1.5 percent in extended trading on Wednesday.

Qualcomm is the world's biggest supplier of chips for smartphones but it has been battered by growth slowdown in the industry and a loss of major customer Apple.

And while Qualcomm has warned its investors that it expects no revenue from Apple's newest iPhones, Qualcomm has struck deals with Chinese mobile phone makers including Xiaomi, Oppo, Vivo, and OnePlus, all of which offer lower-cost models in emerging markets like India.

The company has also eased its licensing requirements, which helped it retain large customers like Samsung Electronics with new license deals.

Excluding items, Qualcomm earned 90 cents per share, beating analysts' estimates of 83 cents, according to IBES data from Refinitiv.

Revenue fell to $5.80 billion, but was still above estimates of $5.52 billion.

Qualcomm's loss was $493 million, or 35 cents per share, in the quarter ended Sept. 30, compared with a profit of $168 million, or 11 cents per share, a year earlier.

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Key Points
  • Apple sued Qualcomm in federal court in San Diego, alleging that the chip company's practice of taking a cut of the selling price of phones as a patent license fee was illegal.
  • Qualcomm denies the claims and alleges that Apple owes it $7 billion in unpaid royalties.
  • Qualcomm CEO Steve Mollenkopf has said the company expects an out-of-court settlement.