Qualcomm CEO Steve Mollenkopf said today on the company\u2019s call accompanying its first-quarter earnings report that Qualcomm would continue to work with Apple as a supplier despite a major legal battle between the two companies.
\u201cWe intend to remain a good supplier to Apple even while this dispute continues,\u201d Mollenkopf said on the call. \u201cOur preference is to resolve customer disputes with negotiation instead of litigation, so it\u2019s regrettable Apple has taken this path.\u201d
In terms of actually continuing working with Apple, Qualcomm executives explained that the deals it has in place are with their contract manufacturers. Qualcomm has signed agreements with those manufacturers, which the company expects to continue to uphold, though Qualcomm president Derek Aberle said the company would have to take a \u201cwait-and-see\u201d approach for the future.
\u201cWe would expect and hope that our licensees will continue to comply with their agreements and Apple will not interfere with those contractual agreements in place,\u201d Aberle said on the call. \u201cWe obviously can\u2019t control their actions down the road so we\u2019ll have to see how that develops.\u201d
Apple recently filed a $1 billion lawsuit against Qualcomm over the terms for its technology. Qualcomm\u2019s tactics have also been the subject of charges from the FTC. The company is one of the largest chip providers for smartphones \u2014 such as the Snapdragon processor \u2014 and relies on huge manufacturers like Apple for a major part of their business.
With that in mind, Aberle said it did not expect the legal battle to have an impact on the second quarter. Following the initial legal disputes, Qualcomm\u2019s stock took a very sharp dive. The company now faces a potentially huge roadblock for its core business, which saw some positive signs in its first-quarter earnings report as shipments of 3G and 4G devices were up 8 percent.
\u201cIf you peel apart all the arguments that Apple is making, we believe firmly that they\u2019re all without merit, at the end of the day they want to pay less for the technology that they\u2019re using,\u201d Aberle said. \u201cIt\u2019s pretty simple. That\u2019s the motivation, again they wrap a lot of stuff around that, which we think over time we will be able to clearly show is false. But in the end of the day they want to get to a lower payment. We think that\u2019s not appropriate given the value we\u2019ve established.\u201d
Wall Street was looking for Qualcomm to deliver earnings of about $1.18 per share on $6.12 billion in revenue, while the company said it earned $1.19 per share on $5.99 billion in revenue. While the results came out a little mixed, the legal battle between Apple and Qualcomm continues to cast a big shadow over Qualcomm\u2019s future.
\u201cWe have a long history of successfully defending our licensing and practices business model, which have been tested around the globe,\u201d Mollenkopf said. We are very excited about the future and many opportunities directly in front of us. I am confident we will address and get through the legal challenges underway as we have done many times in the past.\u201d<\/p>\n