fourth-quarter revenue line will be a lot smaller than previously forecast thanks to an accounting change the company announced Friday.
The San Diego technology shop decided to stop estimating future royalties from manufacturers using its wireless transmission algorithms, saying revenue streams in the industry had become unpredictable. The decision will show up first in the company's fourth-quarter earnings report, which will show a big gap where future royalties are no longer counted.
The new accounting reflects an internal review that was
announced last month.
"This decision was reached primarily due to escalating trends in the wireless industry that impact the company's ability to accurately estimate royalties, including the commercial launch and rapid global expansion of WCDMA networks, changes in market share among licensees due to increased global competition and increased variability in the chipset inventories of licensees," Qualcomm said.
Qualcomm said the change will have no effect on operating cash flow or the underlying economics of its licensing business. Next quarter's earnings statement will include two revenue breakdowns, one reflecting the old treatment and one reflecting the new.
Qualcomm was recently down 63 cents, or 1.5%, to $40.76 on Instinet.