By Ted Greenwald

Qualcomm Inc.'s first-quarter net profit slumped by 53% as expenses rose by more than a quarter during the period.

Stripped of certain items, however, adjusted earnings rose to $1.19 from 97 cents, beating the estimates of analysts cited by Thomson Reuters by a penny. Revenue for the period rose 3.9% to $6 billion, less than the $6.12 billion analysts had predicted.

The smartphone chip leader's earnings disclosure Wednesday was largely overshadowed by concerns over the future of its patent licensing business, which latelyhas accounted for 80% of pretax profit, according to the company, and the fate of its $39 billion bid to buy NXP Semiconductors NV, a deal that would broaden its offerings and distribution in markets poised for higher growth than the slowing smartphone market.

Apple Inc. also said Wednesday it filed two lawsuits against Qualcomm in China, extending its legal battle with its longtime chip supplier into the world's biggest market for smartphones.

Shares of Qualcomm fell 1.6% to $56 in after-hours trading. The stock had dropped nearly 13% earlier in the week on fears the company's profits and prospects are at risk.

Referencing the recent legal and government actions against the company, Qualcomm Chief Executive Steve Mollenkopf said, "As we have done in the past, we will vigorously defend our business model and the value of a portfolio of technologies that has been so instrumental to the success of the mobile communications industry."

The San Diego, Calif., company holds dominant market share in smartphone chips. Its Snapdragon line, which combines communication and processing functions, drives the latest flagship smartphones from Alphabet Inc.'s Google division, Samsung Electronics Co., Chinese phone maker Xiaomi, and others, while Apple uses its communication chips.

However, in recent years Qualcomm has come under fire from regulators and customers who challenged the fairness of its patent licensing practices. Late last year, a South Korean regulator said it would fine the company for alleged antitrust violations, the highest such penalty handed to an individual company in the Asian country. The quarterly results released Wednesday include an $868 million charge linked to an investigation by the Korea Free Trade Commission.

Besides the fine by Korean regulators, the U.S. Federal Trade Commission in January sued the company for using its monopoly in mobile communications chips unfairly to block competitors.

Qualcomm vowed to fight both cases. A lawsuit filed by Apple in February alleging Qualcomm used its monopoly position to seek "onerous, unreasonable and costly" terms for use of its patents, demonstrated at least one major Qualcomm customer is concerned as well.

The pending tie-up between Qualcomm and NXP, which would be the largest in Qualcomm's history, would have to pass muster with the same regulators challenging its licensing business, giving rise to uncertainty the deal will close in a timely fashion, or at all.

For the period ended Dec. 25, Qualcomm reported a profit of $700 million, or 46 cents a share, down from $1.5 billion or 99 cents a share.

For the current quarter, the company expects revenue between $5.5 billion and $6.3 billion with adjusted earnings per share between $1.15 and $1.25. Analysts expect earnings of $1.20 a share on revenue of $5.9 billion.

Ezequiel Minaya contributed to this article.

Write to Ted Greenwald at Ted.Greenwald@wsj.com

(END) Dow Jones Newswires

January 25, 2017 17:45 ET (22:45 GMT)

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