Qualcomm and its rivals are quick to brush off how much money they spend on their ongoing legal battles, as they bicker over issues like patent infringement. Qualcomm’s army of attorneys are costing the company so much money, that it has started to hurt the profit line. In fact it has had to lower its first fiscal quarter earnings per share guidance in part due to legal costs.
Additionally, our legal expenses in the quarter have increased above our prior expectations as we continue to vigorously defend the legal attacks on our business model. As a result, we now anticipate first fiscal quarter QUALCOMM pro forma diluted earnings per share to be approximately $0.41 to $0.42, compared to $0.39 in the year ago quarter. We previously anticipated first fiscal quarter QUALCOMM pro forma diluted earnings per share of approximately $0.42 to $0.44.
That’s not a good sign given Qualcomm lost the last two rounds against chip rival Broadcom. A Nokia exec was recently quoted as saying that the company that won the fight over patents for 3G technology would set the conditions for all future wireless standards. That Qualcomm is overspending shows that all may not be well on the patent front.
Of course, without that monopolistic control of patents/standards, the entire Qualcomm profit machine breaks down. No wonder, Qualcomm is willing to spend heavily to try to win that fight, and take its lumps in the near term.