Qualcomm (NASDAQ:QCOM) investors will be hoping for a turnaround when the company releases its third-quarter fiscal 2017 results on Wednesday, July 19. The stock has been down so far this year as it has been dealing with a number of problems, such as the company's tiff with Apple over royalties, and a shrinking market share in smartphone chips.

Because of the Apple royalty dispute, Qualcomm had to shave off $500 million from its third-quarter revenue guidance, and scale down its earnings forecast by a wide margin. Therefore, investors won't be expecting too much from the company's upcoming results, though they will be hoping for a stronger outlook so that the stock can get a boost after sliding close to 15% this year.

A man using a smartphone to control his home

Image source: Qualcomm.

The headline numbers

Qualcomm's problems will take a heavy toll on its third-quarter revenue: Analysts expect the company's top line to slide almost 13% year over year to $5.26 billion. This will also negatively impact the company's earnings, which are expected to drop to $0.81 per share, from $1.16 per share in the prior-year period. Investors in the chipmaker should brace for a weak quarterly report that won't do enough to turn around its flailing fortunes.

What about the outlook?

Qualcomm needs a sunny outlook to arrest its sliding stock price, though analysts don't expect one from the company. Estimates suggest that the company's revenue could slide 10% year over year during the fiscal fourth quarter, which isn't surprising as its problems with Apple are still continuing.

Qualcomm requested the International Trade Commission to block the sales of certain iPhones that the chipmaker believes infringe upon its patents, so there seems to be no end to the Apple-Qualcomm saga in the near term. This is going to hurt Qualcomm's revenue quite substantially during the second half of the year, as this is the time when Apple ramps up its iPhone production.

Analysts interviewed by CNET believe that Qualcomm's royalties from each iPhone average between $10 and $20, so the company stands to lose a lot from Apple's blocked royalty payments, especially has the latter's iPhone production is expected to go through the roof this year. Investors in Qualcomm should also prepare themselves for a weak outlook as the company won't be able to ride Apple's iPhone wave under the current circumstances.

Apple believes that Qualcomm charges very high royalty fees -- five times more than what it pays to other patent holders. As a result, the chipmaker might have to reduce its royalty rates on iPhones, which will negatively impact its revenue and earnings in the long run, as Apple reportedly supplies 30% of Qualcomm's earnings.

Not surprisingly, consensus estimates expect the company's earnings to drop in fiscal years 2017 and 2018. This year, Qualcomm is expected to earn $4.25 per share, down from $4.44 per share last year. The situation will be bleaker next year as the chipmaker's earnings could fall to just $3.89 per share when its royalty rates drop in a bid to solve its Apple dispute.

Of course, Qualcomm is trying to make a dent in new markets such as audio chips and smart homes, but these efforts will take time to bear fruit. Until then, the stock will continue to be weighed down by the Apple royalty dispute, given the impact that Cupertino has on Qualcomm's business; the company's upcoming earnings report might not do much to help it make a comeback.

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