clock menu more-arrow no yes

Qualcomm Cuts Outlook, Warning Its Snapdragon 810 Dropped From a Flagship Device

The chipmaker also said it continues to have concerns about its China business despite having resolved one customer dispute.

Reuters / Albert Gea

Qualcomm said Wednesday cut its financial outlook for the current fiscal year, confirming its Snapdragon 810 chip was dropped by a large customer.

A Qualcomm representative declined to say which phone maker has dropped the Snapdragon 810, though reports have said the chip has heat issues and that Samsung had pulled the processor from its upcoming Galaxy S6. The 810 has been announced for use in some other products, including the LG Flex 2.

The company also blamed continued concerns over its China business for the lowered outlook, though Qualcomm did say it has resolved a dispute with a Chinese customer over licensing payments.

“China continues to present significant opportunities for us, particularly with the rollout of 3G/4G LTE multimode, but also presents significant challenges, as our business practices continue to be the subject of an investigation by the China National Development and Reform Commission,” Qualcomm said in a statement. Qualcomm also said that, despite settling one dispute, it still believes some customers in China are underreporting sales of licensed chips amid the government probe.

Shares plunged more than 8 percent in after-hours trading, changing hands recently at $64.81, down $6.18, or 8.7 percent.

The announcement came as the company released its latest quarterly earnings. The company reported it earned $1.17 per share in earnings, on a higher-than-expected revenue of $7.1 billion. Per-share earnings, excluding certain items, was $1.34, ahead of analysts’ estimates of $1.25.

For the current quarter, Qualcomm said it expects overall company revenue of between $6.5 billion to $7.1 billion, with per-share earnings, excluding charges, of approximately $1.28 to $1.40. That’s roughly in line with what analysts had been expecting. Current estimates forecast $1.28 in per-share earnings and revenue of $6.74 billion, according to Yahoo Finance.

However, Qualcomm cut its revenue and earnings forecast for the full year, saying it now expects revenue of $26 billion to $28 billion, down from an earlier forecast of $26.8 billion to $28.8 billion. Full year per-share earnings are now seen between $4.75 and $5.05, down from a prior range of $5.05 to $5.35.

The chipmaker is due to discuss its earnings and forecast in a conference call that begins at 1:45 pm PT. Check back for updates.

Update, 1:49 pm PT: On a conference call, Mollenkopf said that the company continues to cooperate with the China probe and “believe it is progressing toward a resolution.”

The company said it is gaining share in China, but not at the rate it had hoped amid challenges with one of its chips and strong price competition from competitors there.

As for the 810, Mollenkopf said that the “Snapdragon 810 is performing well” despite the fact it was dropped by the key customer. Qualcomm said it expects the chip to be in more than 60 devices. He also noted that the 810, unlike most Qualcomm processors, uses a licensed core, rather than a Qualcomm-customized one. That was done to get the company to a 64-bit processor faster, but Mollenkopf said the company’s next premium chip will use a Qualcomm-customized core. That chip should sample before the end of the year, Mollenkopf said.

2:20 p.m.: Asked about the rumored heat issues with the 810, Mollenkopf said “the device is working the way we expected it to work” and said the issues were limited to the particular customer (clearly Samsung–though he didn’t say the S-word). “We just wish it had won one more design.”

Mollenkopf also noted that the customer has lots of phone designs and that Qualcomm expects to be in many of those.

This article originally appeared on Recode.net.

Sign up for the newsletter Sign up for The Weeds

Get our essential policy newsletter delivered Fridays.