Qualcomm Inc., the largest chipmaker for smartphones, posted revenue and profit for the quarter that beat estimates by Wall Street, which helped to ease concerns that surround the dispute the company has with Apple Inc.
Investors helped push up shares 2.4% that prior to now have been the year to day worst performer on the Philadelphia semiconductor index.
Apple sued Qualcomm this past January, accusing the maker of chips of overcharging chips and refusing to pay close to $1 billion in rebates it had promised.
On Wednesday, Qualcomm said that contract manufacturers of Apple had underpaid royalties during the second quarter, but revenue had not been affected as the amount had been similar to what was claimed by Apple that it was owed by Qualcomm.
Qualcomm, based in San Diego, warned as well that it was not clear if contract manufacturers of Apple would underpay their royalties for the third quarter, which led to a profit forecast wider than was usual for the three-month period.
However, Qualcomm CEO Steve Mollenkopf announced during a call after earnings were posted that the company was expecting to continue as an important Apple supplier now as well as in the future.
Qualcomm forecasted adjusted profit for the current quarter of between 90 cents and $1.15 a share and revenue of between $5.3 billion and $6.1 billion.
Analysts were expecting $1.09 a share profit with revenue of just over $5.94 billion.
The issue with royalties weighed on the results of the second quarter for Qualcomm as well.
The recently ended quarter included a reduction in revenue of $974 million equal to 48 cents a share due to an arbitration related to a dispute Qualcomm had with Blackberry.
Revenue was down 9.5% to just over $5.02 billion for the three-month period ending March 26.
Qualcomm adjusted revenue was $5.99 billion which beat the estimates of analysts of $5.90 billion.
Despite worries over litigation, revenue for its Technology Licensing unit increased 5% to end the quarter at $2.25 billion beating an estimate of $2.24 billion by analysts.
Its licensing unit accounted for 85% of the earnings of the company prior to taxes last year.
Qualcomm said demand increased for mobile chip Snapdragon, particularly in China, which help boost revenue 10% in its unit of chip making.
Market share for Qualcomm in China should increase to 65% in 2017 from a current 50%. Excluding certain items, earnings per share for Qualcomm were $1.34, compared to estimates by analysts of $1.19.
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