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Apple Is One of the Many Factors Affecting Qualcomm’s Revenue

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Qualcomm’s fiscal 2019 first-quarter revenue

Previously, we learned that several macroeconomic, regulatory, and legal headwinds have affected Qualcomm (QCOM) in recent years. Some factors played in its favor, helping it report a 2% YoY (year-over-year) rise in revenue in fiscal 2018.

The above-mentioned headwinds affected Qualcomm’s fiscal 2019 first-quarter results, but the company is working around these issues and expects to see a decent year.

In the first quarter of fiscal 2019, Qualcomm’s revenue fell 20% YoY to $4.84 billion, its highest YoY fall in more than three years. This was also Qualcomm’s first YoY fall in the first quarter, which is a seasonally strong one for the company, as it’s when it reports its holiday season sales.

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Factors influencing Qualcomm’s revenue

The 20% fall came as Qualcomm lost modem orders for Apple’s (AAPL) 2018 iPhone models, which saw its modem chip shipments fall 21.5% YoY to 186 million. Because modem sales to Apple are skewed to the first quarter, the magnitude of the revenue decline was high in the period. The company’s revenue decline also resulted from overall weakness in smartphone shipments, which fell 4.9% YoY in the fourth quarter, according to the IDC. Qualcomm and many of its peers reported declines. Samsung (SSNLF) and Apple, for example, reported 11% and 15% YoY falls in their mobile revenue.

Due to demand weakness, Qualcomm reduced its estimated total number of devices sold, on which it charges a royalty, in the first quarter of fiscal 2019. This demand weakness was partially offset by a $150 million partial licensing payment from Huawei as part of a new interim agreement between Huawei and Qualcomm. Under the agreement, Huawei will pay $15 million to Qualcomm for three consecutive quarters. It also benefited from strong growth in the adjacent Internet of Things market in the quarter.

Back in September 2018, Qualcomm guided for a revenue range of $4.5 billion–$5.3 billion for the first quarter of fiscal 2019, which excluded $150 million in revenue from Huawei. Excluding this payment, Qualcomm’s fiscal 2019 first-quarter revenue was $4.66 billion.

Next, we’ll see how the rest of fiscal 2019 is expected to shake out for Qualcomm.

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