Apple cuts off payments, Qualcomm slashes expectations
Qualcomm slashed its profit expectations Friday by as much as a third after saying that Apple is refusing to pay royalties on technology used in the iPhone.
Its shares hit a low for 2017.
Apple Inc. sued Qualcomm earlier this year, saying that the San Diego chipmaker has abused its control over essential technology and charged excessive licensing fees. Qualcomm said Friday that Apple now says it won't pay any fees until the dispute is resolved. Apple confirmed Friday that it has suspended payments until the court can determine what is owed.
"We've been trying to reach a licensing agreement with Qualcomm for more than five years but they have refused to negotiate fair terms," Apple said. "As we've said before, Qualcomm's demands are unreasonable and they have been charging higher rates based on our innovation, not their own."
Qualcomm said it will continue to vigorously defend itself in order to "receive fair value for our technological contributions to the industry."
But the effect on Qualcomm, whose shares have already slid 15 percent since the lawsuit was filed by Apple in January, was immediate.
Qualcomm now expects earnings per share between 75 and 85 cents for the April to June quarter. Its previous forecast was for earnings per share between 90 cents and $1.15.
Revenue is now expected to be between $4.8 billion and $5.6 billion, down from its previous forecast between $5.3 billion and $6.1 billion.
Shares of Qualcomm Inc. tumbled almost 4 percent at the opening bell to $51.22.
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