QUALCOMM, Inc. (NASDAQ:QCOM) disclosed that it filed a complaint against Apple Inc. (NASDAQ:AAPL)’s four suppliers for breaching their license agreements, as well as, other commitments. These suppliers, Foxconn, Pegatron Corporation, Wistron Corporation, and Compal Electronics, Inc., have also refused to pay for using the chipmaker’s licensed technologies. As a result, the company sought an order requiring the defendants to comply with contractual obligations apart from relief and damages.
QUALCOMM revealed that the manufacturers are not paying their dues following the instructions from Apple despite long history of consistently paying royalties under the agreements. The company pointed out that the license deals with the makers were entered into even before Apple started selling its first iPhone and that the iPad maker was not a party to the deals.
Aside from that, the defendants continue to pay the chip maker royalties in non-Apple products with the same agreements that is applicable to the tech bellwether. Qualcomm has also filed a separate claim against iPhone maker for the unlawful interference with the license deals.
The company’s EVP and general counsel, Don Rosenberg, commented, “As Apple continues to collect billions of dollars from consumer sales of its Qualcomm-enabled products, it is using its market power as the wealthiest company in the world to try to coerce unfair and unreasonable license terms from Qualcomm in its global attack on the company. Our license agreements with Apple’s manufacturers remain valid and enforceable. The manufacturers must continue to live up to their obligations under these agreements and Apple should immediately cease its tortious interference.”
On April 28, QUALCOMM issued a statement that it was reducing its guidance citing Apple’s non-payment of dues. The company indicated that it expects its adjusted EPS to be 75 – 85 cents in the third quarter, which was well below the Street analysts’ expectations of $1.04 a share at that point in time. Previously, the company guided $0.90 – $1.15 a share for the third quarter. Last week, the company delivered strong earnings and revenue that topped estimates. Its positive earnings surprise was 12.6 percent.
Similarly, the chipmaker has slashed its revenue expectations to $4.8 – $5.6 billion from its previous guidance of $5.3 – $6.1 billion for the same period. Analysts were looking for revenue of $5.79 billion.
At time of writing this, QUALCOMM shares are trading down 0.82 percent in pre-market.