Thank you, Steve, and good afternoon everyone.
Our fiscal second quarter results were above the midpoint of our guidance with revenues of $5.3 billion and non-GAAP earnings per share of $0.80 per share, $0.10 above the midpoint of our guidance. The non-GAAP EPS outperformance in the quarter was driven by higher MSM shipments, improved gross margins in QCT, a more favorable tax rate from lower domestic versus foreign earnings and lower operating expenses. In QCT, MSM chip shipments were $187 million, towards the high end of our guidance range. QCT revenues were $3.9 billion, in line with expectations. As we expected, QCT results this quarter reflected the normal seasonal effects of lower demand, typical in the calendar first quarter, a reduction in orders sequentially from a large modem customer and reduced demand from customers in China as they reduced inventory balances. As a result, we saw handset inventory balances in China come down in line with long term trends. While we remain conservative on demand for the second half of the year, we think the lower level of inventory is a very healthy development. QCT's earnings before tax was up 28% year-over-year, the eighth consecutive quarter of year-over-year growth. QCT EBT margin was 16%, above the high end of our guidance range, reflecting stronger than expected gross margins in mobile, primarily in product cost benefits, including some discrete benefits related to conclusion of negotiations with a supplier. QTL fiscal second quarter revenues were $1.26 billion, slightly above the midpoint of guidance and included a modestly higher amount of out of period catch-up that we anticipated offset by lower than expected 3G/4G units reported by licensees for the December quarter, particularly in the emerging regions. Note that these results exclude royalty revenues on Apple's products and the other licensee in dispute. It is also worth noting that in the December quarter we continue to see strong year-over-year trends in global 3G/4G handset ASPs across various price levels. We are seeing significantly higher run rate spending this year driven by litigation matters related to Apple and the FTC. In the second fiscal quarter, we spent approximately $125 million on these cases and expect that to ramp further in Q3. Spending is somewhat more heavily weighted in the second half of our fiscal year, in line with broad-based discovery activities and the timing of IP cases globally. We will provide information on our OpEx, both with and without excess litigation, so that the underlying cost structure changes are more visible. QTL earnings before tax was $850 million, or 67% of revenues, above the midpoint of expectations or 78% if you adjust for extraordinary litigation expense. For Qualcomm overall, non-GAAP combined R&D and SG&A expenses decreased approximately 2% sequentially or down 4% if you adjust for extraordinary litigation expense. We began implementing our $1 billion cost plan that will accelerate in the latter part of the year. In Q2 we booked restructuring and related charges under the cost plan of $310 million or $0.18 per share. These items were excluded from non-GAAP results. It is important to note that these initiatives will not impact our strong investment in 5G and our commitment to grow in mobile, RFFE, IoT, automotive, networking and mobile compute.
Our non-GAAP effective tax rate during the fiscal second quarter was 4%, favorable relative to our prior guidance due to the catch-up associated with a lower estimated annual effective tax rate on lower domestic versus foreign earnings mix. We ended the quarter with cash and marketable securities of $39.6 billion or $16.5 billion net of outstanding debt.
Turning to our financial guidance for the fiscal third quarter. We estimate revenues to be in the range of approximately $4.8 billion to $5.6 billion and non-GAAP earnings per share to be in the range of approximately $0.65 to $0.75 per share. Our guidance incorporates a relatively balanced mix of positive and negative factors in the quarter with tax benefits related to potential restructuring opportunities under tax reform offsetting the impacts of initial plan changes in our licensing program, higher litigation costs in the quarter and approximately $0.03 of expected ZTE order effects across the company. In QTL, we are expecting QTL fiscal third quarter revenues of approximately $950 million at the midpoint, down sequentially approximately $300 million. This outlook reflects three primary issues. First, about half of the sequential decline reflects the combined impact of a seasonably low quarter along with generally weak industry conditions along with approximately $40 million in higher onetime catch-up payments in Q2 relative to our outlook for Q3.
Second, we have begun to recognize this quarter the impact related to the recent amendments to our Samsung licensing agreement, including the effects of the expanded cross-license agreement. And third, we are seeing the initial run rate impact of the licensing SEP-only framework including 5G that Steve described earlier. Slightly less than half of the sequential impact on revenue is from the changes to the Samsung agreement and other licensing program terms. I should note that we have also implemented a voluntary revised cap in which the maximum net selling price of a handset on which the royalty is based will be capped at $400 per device, down from $500 per device. This will be broadly implemented in fiscal Q4 and we do not expect a material impact overall.
We expect QTL EBT margin to be approximately 50% to 54% in the fiscal third quarter, down sequentially at the midpoint on lower revenues and increased litigation cost. Without the extraordinary litigation expenses, QTL EBT margin expectations would be approximately 65% to 69%.
Turning to QCT, we anticipate MSM shipments of approximately 185 million to 205 million units during the June quarter, higher sequentially at the midpoint on increased demand in China as inventory improved in the last two months of the fiscal second quarter. We expect QCT's fiscal third quarter EBT margin to be approximately 13% to 15%, down sequentially, primarily due to seasonally weaker product mix including lower thin modem shipments and the absence of the discrete product cost benefit in Q2. We expect fiscal third quarter non-GAAP combined R&D and SG&A expenses will be roughly flat to up approximately 2% sequentially, primarily due to increased litigation expenses as we continue to defend our business model, somewhat mitigated by the impacts of our cost efforts. Excluding the elevated litigation costs, we estimate that our non-GAAP combined R&D and SG&A expenses would otherwise be down approximately 1%. Non-GAAP interest expense net of investment income in the fiscal third quarter is expected to be roughly flat sequentially.
Turning to tax matters. As a result of the recent tax legislation enacted in the U.S., we anticipate implementing certain restructuring options that will reduce our current year tax rate and have been factored into our fiscal third quarter guidance. As a result, we expect our non-GAAP effective tax rate for the fiscal third quarter to be a benefit of approximately 20% to 25%, which we expect to provide a benefit to non-GAAP EPS of $0.10 to $0.15 per share.
Regarding our 3G/4G device shipment forecast, we are updating our unit estimates for calendar year global device shipments for both 2017 and 2018. For calendar year 2017, we now estimate approximately 1.755 billion global 3G/4G devices shipped, up approximately 3% year-over-year at the low end of our prior estimates, primarily due to lengthening replacement rates in North America and China in the fourth calendar quarter. For calendar year 2018, we now estimate approximately 1.8 billion to 1.9 billion global 3G/4G device shipments or growth of approximately 5% year-over-year. This is lower from our prior estimate by 50 million units at the midpoint, reflecting a lower 2017 base as well as reduced demand expected in China. Within this population, handset growth is expected to be approximately 3% year-over-year. With respect to global 3G/4G device sales for fiscal 2018, we now expect growth of approximately 10% year-over-year at the midpoint, as the reduction in our estimate of global 3G/4G units in the year is expected to be more than offset by strength in ASPs. Within this population, 3G/4G global handset sales are expected to grow at similar percentage in fiscal 2018, driven primarily by strength in handset ASPs year-over-year.
I will provide some additional color on our committed 2019 targets. As I noted earlier, we are making good progress on the $1 billion cost plan. This is a critical element of our $5.25 non-GAAP EPS target, along with closing NXP, or alternatively moving ahead with our option to repurchase stock. For our licensing business, the 5G royalty rates, the reduced NSP cap and the effects of the amended long-term Samsung license agreement were all factored into our fiscal 2019 guidance. Taking into consideration these items and the expectation of continued growth in global 3G/4G handset sales in fiscal 2019, we expect QTL quarterly revenues in the near and medium term to be in the range of $1 billion to $1.1 billion on average, excluding the royalties from Apple's products and the other licensee in dispute. Of course, the amount in any one quarter will be subject to seasonal fluctuations, OEM mix, out-of-period catch-up amounts and continued progress on the licensing and compliance front, among other factors. In QCT, we expect that fiscal 2019 performance will benefit from continued handset growth, particularly in emerging regions, continued strength in our China share in the mid, high and premium tiers, and growth in adjacent opportunities, including automotive, IoT, networking and mobile compute. That concludes my comments. I will now turn the call back to John.