We're now approaching the two-year anniversary of Qualcomm's (NASDAQ:QCOM) massive legal battle with Apple (NASDAQ:AAPL), which has been wrecking both sides of Qualcomm's business ever since. First filed in January 2017, the dispute rages on unabated, despite Qualcomm initially thinking it could find a way to settle with the Mac maker. At this point, Apple has already shifted all of its new business to rival Intel, although Qualcomm still sells modems for older iDevices.

Qualcomm reported fiscal fourth-quarter results last night, and the ongoing fight continues to weigh on its business.

iPhone XS and XS Max in gold

You won't find Qualcomm modems in Apple's latest iPhones. Image source: Apple.

The headline results

Revenue in the fiscal fourth quarter declined 2% to $5.8 billion, which included $4.6 billion in QCT (the chip business) sales and $1.1 billion in QTL (the licensing business) revenue. Operating expenses were $6.5 billion, leading to an operating loss of $654 million. Net loss was $493 million, or $0.35 per share. There is still $1.7 billion worth of royalty revenue from fiscal 2017 hanging in the balance, as Apple had previously instructed its contract manufacturers not to pay Qualcomm.

Apple's shift to Intel hurt Qualcomm's forecast for the fiscal first quarter. While Qualcomm had already expected as much, the outlook fell short of expectations. The mobile chip giant predicts revenue next quarter will be in the range of $4.5 billion to $5.3 billion, with non-GAAP earnings per share of $1.05 to $1.15. That top-line outlook is well below the $5.6 billion in revenue that analysts were modeling for.

What management had to say about the ongoing dispute

"The combined impact of Apple instructing their contract manufacturers to stop paying their contracted royalty payments and Apple's decision to use a competitor's modem for their latest device has had a significant impact to our financial performance," CEO Steve Mollenkopf said on the earnings call. "Notably, over 50% of the expected fiscal 2019 headwind related to Apple is reflected in our first fiscal quarter guidance, it impacts our QCT business."

In other words, most of the impact will be concentrated in the December quarter, the busiest time for iPhone sales. Qualcomm expects its modem volumes to Apple will be down a whopping 50 million to 55 million compared to a year ago, when Qualcomm was still supplying roughly half of all iPhone modems.

Qualcomm continues marching toward a resolution, but it's going to take time. Here's Mollenkopf:

Regarding Apple, our view on the timeline to resolve our licensing dispute has not changed. We have previously highlighted key litigation milestones in fiscal 2019 that we believe could help drive a resolution. Those litigation milestones have not changed, including the potential for multiple patent infringement rulings in China and Germany before the end of this calendar year.

Aside from infringement of unlicensed intellectual property and other claims, including the recent product-related claims, there are billions of dollars in damages in the breach of contract claims against Apple's manufacturers. We expect a trial date to be set for that matter in San Diego during the early part of next year.

After ongoing escalations around the world, the fight turns 2 years old in January. If the companies are unable to settle their differences, a full-blown trial will only prolong the episode further.