By Noel Randewich
SAN FRANCISCO (Reuters) - Qualcomm Inc <QCOM.O> reduced its outlook for fiscal 2015, saying it expects its newest Snapdragon mobile chip will not be used in a major customer's flagship smartphone, sending its shares lower.
The chipmaker said in a statement on Wednesday it expects fiscal 2015 revenue between $26.0 billion and $28.0 billion, down from a previous estimate of between $26.8 billion and $28.8 billion.
It now expects non-GAAP diluted EPS for fiscal 2015 between $4.75 and $5.05, compared to a previous estimate of between $5.05 and $5.35.
Samsung Electronics Co Ltd <005930.KS>, the world's top smartphone maker, decided not to use the new Qualcomm Snapdragon 810 processor for the next flagship Galaxy S smartphone after the chip overheated during testing, Bloomberg reported earlier this month. Samsung had declined to comment on the report.
Samsung designs and makes its own line of smartphone processors, the Exynos, but the Korean company in the past has depended on Qualcomm's chips for many of its smartphones.
“Qualcomm has a lot of market share but they have some customers with scale to do their own silicon, and it looks like that’s happening,” said Sanford Bernstein analyst Stacy Rasgon. “This may be a trend.”
Qualcomm said its more cautious outlook was also driven by a move toward less expensive smartphones as well as increased competition in China.
China's expanding high-speed 4G network is driving demand for smartphones with leading-edge technology, but Qualcomm's opportunities have been clouded by a year-old antitrust investigation there and troubles collecting royalty payments from device makers.
Qualcomm could face a fine of more than $1 billion in China as a result of the National Development and Reform Commission (NDRC) investigation, and the company could be forced to make concessions that would hurt its highly profitable business of charging royalties on phones that use its patents.
The company said it resolved a previously disclosed dispute with one of its licensees in China.
Qualcomm posted higher fiscal first-quarter revenue that beat analysts' expectations as the antitrust investigation weighed on investor sentiment.
The chipmaker reported first-quarter revenue of $7.1 billion, up 7 percent from the year-ago period. Analysts on average had expected first-quarter revenue of $6.94 billion, according to Thomson Reuters I/B/E/S.
Qualcomm posted first-quarter net income of $2.0 billion, up 5 percent from a year ago. GAAP diluted earnings per share were $1.17.
Its non-GAAP earnings were $1.34 per share, better than the $1.25 expected by analysts.
Qualcomm shares were down 7.24 percent in extended trading after closing down 1.09 percent at $70.99 on Nasdaq.
(Reporting by Noel Randewich; Editing by Meredith Mazzilli and Phil Berlowitz)