The company however lowered its near-term outlook due to suspected under-reported revenues from licensees in China. Qualcomm estimates 287-296 million 3G/4G devices not reported or not licensed by manufacturers this year compared to its previous sales estimate, leading to a revenue shortfall. Some manufacturers may be delaying taking a licence pending the outcome of the investigation by the Chinese authorities into Qualcomm's business practices. Qualcomm said it's taking steps to address the issue, but it can't give a timetable for a resolution.
A report in China's Securities Times said that China's National Development and Reform Commission had concluded that Qualcomm has a monopoly in its market, although it was not clear if this position was abused. The paper's unnamed sources said the NDRC investigation suspected that Qualcomm was undercutting rivals' prices in order to maintain market share, Reuters reported from China. In the high-end market, Qualcomm can allegedly dictate licensing terms as it has no serious competitors. The report termed the investigation "extremely serious", with the NDRC also looking at Qualcomm's customers in China.
As a result of the problems in China, Qualcomm narrowed its outlook for full-year results to 6-9 percent revenue growth and 1.04-1.13 billion devices shipped, versus a previous estimate of 5-11 percent revenue growth and 1.22-1.30 billion devices shipped. The EPS outlook was improved to 17-21 percent growth, helped by further share buybacks planned for the fourth quarter. For Q4, Qualcomm estimates revenues flat to 14 percent higher year-on-year and EPS up 20-31 percent to USD 1.03-1.18.
Alongside the results Qualcomm announced that it plans to invest up to USD 150 million in Chinese start-ups. Qualcomm CEO Steven Mollenkopf was in China to announce the plans. Investments will target companies in internet, e-commerce, semiconductor, education and health. Cambridge Wowo, a mobile education start-up, and Boohee, a mobile healthcare company, are the first beneficiaries. Qualcomm Ventures will advise and direct the investment activities.
