Issues in China hurt Qualcomm’s Q4 results

6 Nov 2014

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Mobile chipmaker Qualcomm yesterday posted disappointing results from its fourth-quarter financials, with revenues falling short of analysts’ expectations.

Despite being up on last year’s revenues, the US$6.69bn take was well off analysts’ expectations of US$7.03bn.

Problems in China seem to be dragging down the company, with Qualcomm warning yesterday an antitrust investigation and problems collecting royalties could harm its business in China next year – it also disclosed new US and European regulatory investigations.

According to Reuters, China’s growing network of high-speed 4G is increasing demand for smartphones with leading-edge technology, “but Qualcomm’s opportunities have been clouded by an 11-month-old antitrust investigation there”.

It seems Wall Street is suitably spooked by these admissions, with share prices down following the news Qualcomm could face a fine of more than US$1bn in China as a result of the National Development and Reform Commission (NDRC) investigation. Not only that, “the company could be forced to make concessions that would hurt its highly profitable business of charging royalties on phones that use its patents”.

Qualcomm president Derek Aberle said the company is continuing to co-operate with the NDRC.

“We’ve continued to meet with them regularly, exchanging some ideas for potential ways to resolve (the issue),” said Aberle. “But we don’t have an ability to update in terms of expectations and timing.”

Global reach of web image via Shutterstock

Gordon Hunt is a journalist at Siliconrepublic.com

editorial@siliconrepublic.com