Shares of Qualcomm (NASDAQ: QCOM) jumped Thursday after the semiconductor company reported its fiscal results in the third quarter. Qualcomm analyst slammed estimates across the board, revealing a patent licensing agreement with Huawei. The stock was up 11.9% at 11:00 am EDT.
Qualcomm reported third-quarter revenue of $ 4.89 billion, roughly flat from the previous year’s period, after returning revenue recognized last year from a settlement agreement with Apples and its contract manufacturers. Revenue from the chip business grew 7% to $ 3.81 billion, while revenue from the licensing segment was down 19% to $ 1.04 billion. Total revenue was about $ 100 million higher than analysts were expecting.
Adjusted earnings (GAAP) per share came in at $ 0.86, up from $ 0.80 in the previous year period and $ 0.15 higher than the average analyst estimate. Earnings before taxes in the chip business jumped 20%, while EBT in the licensing business sank 28%.
Qualcomm reached a global long-term private licensing agreement with Huawei in July. The company expects to recognize $ 1.8 billion in revenue in the fourth fiscal quarter related to the deal, which covers Huawei’s sales from early 2020.
Qualcomm expects to produce adjusted revenue, excluding Huawei patent agreement revenue, between $ 5.5 billion and $ 6.3 billion in the fourth fiscal quarter. This includes chip revenue between $ 4.3 billion and $ 4.9 billion, and licensing revenue between $ 1.2 billion and $ 1.4 billion. The company sees EPS adjusted between $ 1.05 and $ 1.25.
Qualcomm’s guidance assumes a 15% drop in handset shipments due to COVID-19, coupled with a delay of a global unnamed 5G flagship phone, presumed to be Apple’s next 5G iPhones . Reports have indicated that mass production of Apple’s new iPhones is scheduled.
Including Thursday’s rally, Qualcomm stock essentially wiped out all losses driven by its pandemics. Shares of the chip company are now just below their 52-week high.