Embattled chipmaker Qualcomm Technologies Inc. delivered solid fiscal first-quarter results today that may go some way toward dispelling investors concerns over its ongoing legal struggles.

The company reported earnings before certain costs such as stock compensation of $1.20 per share, up 25 percent from the same period a year ago. Revenue fell 20 percent, as expected because of a dispute with Apple Inc., to $4.8 billion. Wall Street was looking for earnings of just $1.09 per share on revenue of $4.9 billion.

“Our fiscal first-quarter results reflected continued strength in our semiconductor business, driven by strong product leadership and operating expense management,” Qualcomm Chief Executive Officer Steve Mollenkopf said in a statement.

Qualcomm’s licensing business unit, Qualcomm Technology Licensing, saw first-quarter revenue fall 20 percent, to $1.02 billion, from a year ago. Meanwhile, Qualcomm CDA Technologies — the company’s biggest business, which includes its microprocessor sales — took home revenue of $3.74 billion, also down 20 percent.

Despite the revenue drop, Qualcomm’s positive earnings helped maintain investor confidence in the company. Shares ticked up more than 1.5 percent in after-hours trading.

The stock was likely given a boost by Qualcomm’s optimistic outlook for the next quarter. The company said it’s expecting earnings in the range of 65 to 75 cents per share on revenue of between $4.4 billion and $5.2 billion. That’s in line with Wall Street’s forecast of 69 cents per share on revenue of $4.81 billion.

Qualcomm remains the world’s largest supplier of computer chips for smartphones and other mobile devices, but it has suffered in recent months from a dispute with Apple over patent royalties that saw it lose the iPhone maker as a customer. In September, Apple dropped Qualcomm as the supplier of chips for its new iPhone models the XS, XS Max and XR, instead choosing to go with rival Intel Corp.’s modem chips.

Qualcomm executives once again reiterated that its bottom line has been hurt by that dispute. Its QTL business revenue did not include royalties on sales of Apple or other products by Apple’s contract manufacturers in the latest quarter, as these payments are being withheld pending the outcome of that case.

The dispute with Apple is unlikely to be settled any time soon, but Qualcomm has seemingly decided to put those matters aside to double down on business performance, analyst Charles King of Pund-IT Inc. said.

“I believe that Qualcomm’s focus on performance rather than the Apple suit was all to the good,” King said. “Not only did the company announce profits that beat analysts’ estimates but it also forecast similar performance in the second quarter. Plus, it returned $1.8 billion to stockholders in the form of a $1 billion share buyback and $750 million in dividends. Shareholders are likely to find all this gratifying, and good reason to stick with the company despite its legal woes.”

The company also negotiated an interim agreement with one of its key customers. Huawei Technologies Co. Ltd., which is also involved in the royalties dispute, agreed to pay Qualcomm $150 million in the quarter.

On the product front, Qualcomm had more encouraging news with the launch of its new Snapdragon 8cx processor for Windows 10 laptops. It also pulled off a successful demonstration of its new cellular vehicle-to-everything platform for connected cars at the Consumer Electronics Show in Las Vegas earlier this month.

Patrick Moorhead, president and principal analyst at Moor Insights & Strategy, told SiliconANGLE that Qualcomm’s performance in the last quarter was all the more impressive because of big questions about the slowdown in the smartphone market, softness in China and the lack of full royalty payments.

“I am surprised how well Qualcomm actually did and I believe investors appreciated the company’s forecast,” Moorhead said.

Photo: Eugenuity/Flickr