Qualcomm Inc. (QCOM - Free Report) , the largest mobile chipset manufacturer using baseband technology globally, has counter attacked tech giant Apple Inc. (AAPL - Free Report) in relation to the last $1 billion lawsuit filed by the latter in the U.S. District Court for the Southern District of California in Jan 2017. Apple had accused Qualcomm of overcharging for chips and refusing to pay some $1 billion in promised rebates.
In its response, Qualcomm clearly mentioned the value of its invented technologies, their contribution and share in the industry through its licensing program. The filing also details Apple’s illegal and improper handling of agreements and negotiations with device manufacturers, misleading regulators to attack Qualcomm around the world and not utilizing the full performance of Qualcomm's modem chips in its iPhone7. Reports also state that Apple had even warned Qualcomm against publicizing the better performance of iPhones with Qualcomm chips.
Considering all the damages incurred, Qualcomm henceforth wants Apple not to further interfere with its agreements with the manufacturers of iPhones and iPads.
The legal battle is basically centered around a high-stakes dispute between the two companies.
Also, just a couple of days before the filing of Apple’s lawsuit, Qualcomm had faced an anti-trust lawsuit from the U.S. Federal Trade Commission. The regulator filed a lawsuit with the U.S. District Court for the Northern District of California claiming that the company used anticompetitive measures to maintain a monopoly in baseband chipset market.
Intel Corp. (INTC - Free Report) and Media Tek are closest competitors of Qualcomm in this field. In addition to iOS, Qualcomm chipsets are vastly used in Alphabet Inc.’s (GOOGL - Free Report) Google developed Android software and Microsoft Corp. (MSFT - Free Report) developed Windows operating system.
Over the past three months, Qualcomm reported a loss of 14.5%, while the Zacks categorized Wireless Equipment industry declined 4.4%.
We believe tough competition in the mobile phone chipset market, stringent regulatory norms along with anti-competitive and unfair business practices charges resulted in the company’s below-par performance.
However, we look forward to Qualcomm’s performance in the to-be reported quarter. Qualcomm’s Snapdragon processor is known for its Internet of Things (IoT) applications. Patent license deals entailing 3G and 4G networks, tie-up with AT&T and Ericsson to test 5G New Radio specification and the launch of China’s first end-to-end data call also bode well for Qualcomm. Moreover, the company is foraying into areas like automotive, networking and mobile computing.
Qualcomm currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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