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Mobile phone chipset manufacturer Qualcomm (NASDAQ:QCOM) could benefit if Apple (NASDAQ:AAPL) releases a CDMA version of the iPhone on Verizon’s (NYSE:VZ) network next year.

Rumors about a Verizon iPhone have been rife since the original iPhone was released in 2007. Bloomberg News recently touched off a new round of speculation by reporting that a Verizon iPhone would drop in January 2011, citing anonymous sources familiar with the two companies’ plans. Apple and Verizon spokesmen have so far declined comment.

Qualcomm competes with Texas Instruments (NASDAQ:TXN), Broadcom (NASDAQ:BRCM), and Marvell (NASDAQ:MRVL) in the mobile phone chipset market. Qualcomm holds patents on CDMA technology and earns royalties on all CDMA mobile phone sales. We forecast a 4% upside to our $42 estimate for Qualcomm’s stock if the Verizon iPhone rumors pan out next year.

CDMA Penetration on the Rise

We estimate that global CDMA mobile phone penetration will increase from around 40% in 2009 to 65% by the end of the Trefis forecast period. This is equivalent to saying that the total number of CDMA mobile phones sold will increase from around 500 million in 2009 to 1.2 billion by 2016.

Verizon’s network is compatible with CDMA technology, while the AT&T (NYSE:T) network is based on GSM technology. The iPhone is currently available only on AT&T’s network in the US. A Verizon iPhone would have to work with CDMA technology, which would require Apple to pay royalties to Qualcomm.

In another article, we argued that Apple could sell 20 million iPhones through Verizon in 2011. This would increase the total CDMA penetration rate to 52% instead of the 50% that we forecast for 2011. In turn, this rise in CDMA phone penetration would yield about a 2% upside to the $42 Trefis price estimate for Qualcomm’s stock.

Qualcomm’s Royalties Business Will Benefit

Qualcomm charges mobile phone vendors an average royalty of around 3.6% on all CDMA-based mobile phone sales. We would expect a Verizon iPhone to drive significant royalty revenues to Qualcomm, based on incremental sales volume and higher iPhone pricing compared to most CDMA phones.

We expect average CDMA mobile phone pricing to decline from around $196 in 2009 to $143 by the end of the Trefis forecast period. You can modify the chart below to see how CDMA phone prices impact Qualcomm’s stock value:

We estimate that the average iPhone price point will be around $500 in 2011. The release of a CDMA iPhone would boost average CDMA mobile phone pricing in 2011 to $180 instead of the $171 that we forecast. This would produce an additional 2% upside to our $42 price estimate for Qualcomm’s stock.

Disclosure: No positions

Source: Verizon iPhone Could Boost Qualcomm's Stock by 4%