(Reuters) - Qualcomm Inc (O:QCOM) reported a 40 percent slump in quarterly profit as its escalating patent battle with Apple Inc (O:AAPL) took a toll on its business.
Shares of the company were down 2.3 percent at $55.40 after the bell on Wednesday.
The chipmaker said its results took a hit as Apple's contract manufacturers did not pay royalties due on sales of Apple products.
There has been long-running tension between the company and the iPhone maker over Qualcomm's practice of taking a cut of the total price of the phone in exchange for modem chips, which connect phones to wireless networks.
Apple Inc (O:AAPL) first sued the chipmaker in January, accusing it of overcharging for chips and refusing to pay some $1 billion in promised rebates.
Since then both companies have filed a series of lawsuits against each other.
Qualcomm's patent-licensing practices have also come under scrutiny from governments across the world and other customers.
The company said third-quarter results included a reduction in operating cash flow due to a $940 million payment to BlackBerry Ltd (TO:BB) and a $927 million payment related to the Korea Free Trade Commission (KFTC) fine, in addition to the payments withheld by Apple to its contract manufacturers.
Qualcomm forecast current-quarter adjusted profit of 75 cents to 85 cents per share and revenue of $5.4 billion to 6.2 billion.
Analysts were expecting an adjusted profit of 90 cents per share and revenue of $5.48 billion, according to Thomson Reuters I/B/E/S.
Net income attributable to the company fell to $866 million, or 58 cents per share, in the third quarter ended June 25 from $1.44 billion, or 97 cents per share, a year earlier.
Revenue fell 11.1 percent to $5.4 billion.
Excluding items, the company earned 83 cents per share. Analysts had expected a profit of 81 cents per share.