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Mon, Feb. 8, 10:10 AM
- OTR Global reports Ambarella's (NASDAQ:AMBA) IP security camera and automotive SoC pricing is down 15%-20% Q/Q in Q1 due to competition in China.
- The firm also reports Qualcomm (NASDAQ:QCOM) is pushing for design wins with major Ambarella clients such as GoPro and (consumer drone leader) DJI for drone and high-end sports camera SoCs (source: Notable Calls). Qualcomm recently launched its Snapdragon Flight drone reference platform, as well as an IP security camera reference platform known as the Snapdragon 618.
- Ambarella is among the biggest tech decliners on a morning the Nasdaq is off 2.3%. Shares have made fresh 52-week lows.
Wed, Feb. 3, 11:13 AM
- Bloomberg reports Google (GOOG, GOOGL) is "planning to publicly give its support" for Qualcomm's (QCOM +1.4%) first ARM (ARMH +2.2%) server CPUs at an investor event next week. It adds Google and Qualcomm have cooperated on design work, and that the former will commit to using the latter's chips if they meet performance goals.
- Google is the world's biggest server buyer, and has largely relied on Intel's (INTC -4.1%) Xeon CPUs. The Web giant's adoption of Qualcomm processors, even if for only a fraction of its workload, would act as a major reference win for the fledgling ARM server CPU market. There has been speculation Amazon might also adopt ARM server CPUs, following its acquisition of chip startup Annapurna Labs (recently unveiled a line of low-end network processors).
- Qualcomm is just four months removed from showing off a prototype ARM server CPU featuring custom cores. The company has been hoping the server market will provide a long-term sales lift as it continues dealing with mobile pressures - Qualcomm's chip division (QCT) sales fell 22% Y/Y in calendar Q4 to $4.1B.
- Intel has been hoping to keep Google and other major Web/cloud clients loyal in part by providing custom Xeon CPUs, and by creating products that place Xeon chips and recently-acquired Altera's FPGAs (can be programmed on the fly to handle new algorithms/code) in the same package. Qualcomm has partnered with Altera archrival Xilinx.
- Qualcomm and ARM are higher in spite of a 1.6% Nasdaq drop. Intel is underperforming; shares are down 3.3% after accounting for the fact Intel is trading ex-dividend.
Thu, Jan. 28, 10:37 AM
- Initially up yesterday after posting an FQ1 beat and issuing soft FQ2 guidance - expectations were fairly low following warnings from fellow iPhone suppliers and Apple's light guidance - Qualcomm (NASDAQ:QCOM) has tumbled to new multi-year lows today.
- Aside from the guidance, Qualcomm could be pressured by an earnings call disclosure (transcript) that LG contends its royalty payments are excessive, and has taken its claim to arbitration. Qualcomm deferred over $100M worth of licensing revenue in FQ1 due to the dispute, which comes amid a probe by Korean regulators regarding Qualcomm's IP licensing practices.
- MSM shipments/device sales: Weak chip sales (including, presumably, to Apple) are set to weigh on FQ2 results: After totaling 242M in seasonally strong FQ1 (-10% Y/Y, but near the high end of a 225M-245M guidance range), MSM chip shipments are expected to drop 16-25% Y/Y in FQ2 to 175M-195M. "Improving trends" are expected for chip sales in the second half of FY16.
Reported device sales (on which royalties are collected) are expected to be down 4%-14% to $65B-$73B, after rising 7% in FQ1 to $60.6B (above guidance of $50B-$58B, thanks in part to Chinese licensing deals). Estimated 3G/4G device ASP (affects royalties) was $193-$199 in FQ1 vs. $207--$213 in FQ4 and $194-$200 a year ago. For calendar 2016, Qualcomm still sees total 3G/4G device sales rising 7%-13% to 1.67B-1.77B.
- Financials: FQ1 chip division (QCT) revenue -22% Y/Y to $4.1B; op. profit -49% to $590M. Licensing division (QTL) revenue -12% to $1.61B (the LG dispute weighed); op. profit -15% to $1.34B. Thanks to job cuts, GAAP R&D spend was flat Y/Y at $1.35B, and SG&A spend down 1% to $578M.
Lifting EPS: $2.05B was spent to buy back 36.6M shares. Qualcomm ended FQ1 with $30.6B in cash ($27.9B offshore) and $11B in debt.
- William Blair has downgraded to Market Perform, and Topeka Capital has cut its target by $2 to $50. FBR's Chris Rolland (Market Perform) is worried about the LG dispute, a perceived slowdown in mobile innovation that has allowed OEMs to increasingly use their own app processors and baseband modems, and lower royalty rates for 4G-only devices relative to multi-mode (3G/4G) devices.
- Qualcomm's results/guidance, earnings release, slides (.pdf)
Wed, Jan. 13, 10:09 AM
- Qualcomm (QCOM +1.9%) is forming a 51/49 JV with Japanese electronic component maker TDK (OTCPK:TTDKY) to be known as RF360 Holdings. The JV is declared to pair TDK's RF filter/module expertise with Qualcomm's RF front-end solutions, and will create filters and front-end modules for mobile devices, IoT hardware, drones, robots, and other end-markets.
- Deal terms: The deal is expected to close by early 2017, and is estimated to have an "aggregate transaction value" of $3B. Qualcomm says its up-front capital investment will total $1.2B, and forecasts the JV will be accretive to EPS in the 12 months following closing. It has the option to buy TDK's interest in the JV 30 months after closing. Qualcomm will also buy "certain assets" from TDK, and partner with the company in areas such as sensors and wireless charging.
- Qualcomm: "RF360 Holdings will have a comprehensive set of filters and filter technologies, including surface acoustic wave (SAW), temperature-compensated surface acoustic wave (TC-SAW) and bulk acoustic wave (BAW) to support the wide range of frequency bands being deployed in networks across the globe. Moreover, RF360 Holdings will enable the delivery of [RF front-end] modules that will include front-end components designed and developed by [Qualcomm]. These components include CMOS, SOI and GaAS Power Amplifiers, a broad portfolio of Switches enhanced via a recent acquisition, Antenna Tuning and the industry's leading Envelope Tracking solution."
- In presentation slides (.pdf), Qualcomm notes the RF front-end market is expected to see a 13% CAGR from 2015-2020 (per Mobile Experts), eventually reaching a size of $18B (aided by growing mobile RF complexity and filter needs). The company adds the businesses being transferred to the JV by Qualcomm and TDK have a revenue run rate approaching $1B/year.
- Qualcomm is higher following the news, while RF chip/module maker Qorvo (QRVO -7.8%) is off sharply. Qorvo rivals Skyworks (SWKS -2%) and Avago (AVGO -1%) are seeing moderate losses. The group also sold off when Qualcomm first unveiled its RF360 front-end module in 2013.
Dec. 15, 2015, 7:43 AM
- "The current structure is the best way to execute on our strategy to build on our position in the ecosystem and deliver enhanced performance and returns," says CEO Steve Mollenkopf.
- With FQ1 nearly complete, the company expects results to be at or modestly above the high end of previous guidance.
- A conference call is set for 8:30 ET.
- Source: Press Release
- QCOM +2% premarket
Dec. 14, 2015, 2:22 PM
- Bloomberg reports Qualcomm's (NASDAQ:QCOM) board will meet in the coming days (and possibly announce a decision by week's end) to determine whether to split the company's chip division (QCT) from its IP licensing division (QTL), a move activist Jana Partners has urged the company to consider. Management is said to be "leaning toward keeping the company together."
- Qualcomm announced in July (along with major job cuts) it would explore a breakup and other strategic options. Since then, president Derek Aberle has suggested his company isn't crazy about the idea. QCT creates IP that's later licensed by QTL, while QTL's licensing efforts help keep QCT's royalty expenses down (due to cross-licensing deals).
- Separately, Morgan Stanley's Katy Huberty has cut her iPhone shipment forecasts in response to new checks. She now expects iPhone sales to drop 3% in calendar 2016 and 6% in Apple's FY16 (ends Sep. '16).
- Qualcomm has sold off, but less so than some other Apple suppliers.
Dec. 8, 2015, 8:20 AM
- Qualcomm's (NASDAQ:QCOM) antitrust issues grow as the European Commission lays out two charge sheets against the company. Qualcomm, according to the EU, may have illegally paid a major customer for using its chipsets, and engaged in predatory pricing with the sale of chipsets.
- The company could face a $2.7B fine - equal to 10% of total 2014 revenue - if found guilty of the charges. Earlier this year, Qualcomm paid $975M to make a Chinese probe into anti-competitive practices go away.
- Shares -2.35% premarket
Dec. 2, 2015, 8:01 AM| Dec. 2, 2015, 8:01 AM | 4 Comments
Nov. 20, 2015, 12:41 PM
- Ambarella (NASDAQ:AMBA) has rallied strongly on a day the Nasdaq is up 0.6%. 2.74M shares have been traded; the 3-month daily average is 2.97M.
- On the week, Amabrella is up 15%. The gains come even though top client GoPro (while up 2.5% today) is down 4% on the week after getting hammered on Wednesday due to a bearish Piper note raising pricing/margin concerns. Ambarella, which also sells to GoPro's (NASDAQ:GPRO) rivals and services various non-action camera markets, rose modestly on Wednesday in spite of GoPro's fall.
- Canaccord defended the video processor developer on Monday following a talk with CTO Les Kohn. Kohn argued rival solutions from app processor vendors such as Qualcomm, Intel, and Nvidia can't match Ambarella's offerings in terms of compression and power efficiency, and claimed 3x advantages for both memory bandwidth and power needs for H.264 video compression. Qualcomm (NASDAQ:QCOM) has tried to differentiate its drone offerings in part by providing system-level reference architectures; the company also recently unveiled an IP video camera reference platform.
- Ambarella's FQ3 results are due on Dec. 3. 12.4M shares (43% of the float) were shorted as of Oct. 30.
Nov. 18, 2015, 10:17 AM
- The staff of South Korea's Fair Trade Commission (KFTC) allege some of Qualcomm's (NASDAQ:QCOM) IP licensing practices are illegal, and recommends a fine and business practice changes.
- Qualcomm insists its practices are in-line with global norms, and plans to challenge the staff's findings before the KFTC commission. The company has also been dealing with probes from the U.S. FTC and EU regulators; its Chinese dispute was settled in February. EU regulators have been examining the links between Qualcomm's chip and licensing ops; the FTC has been probing the potential violation of obligations to license patents under FRAND terms.
- The allegations come at a time when Qualcomm's relationship with major customer/Korean IT giant Samsung (OTC:SSNLF) has become quite complicated. Samsung opted to exclusively use its Exynos app processors in the Galaxy S6 and Note 5, and also used its own baseband modems in many versions. Qualcomm's Snapdragon 820 baseband/app processor (next-gen flagship, expected to be manufactured by Samsung) will reportedly go into at least some Galaxy S7 models. However, Samsung recently unveiled the Exynos 8890, a baseband/app processor with custom ARM cores and support for 600Mbps peak 4G download speeds.
- Qualcomm recently officially launched the 820, while promising 30% lower power consumption than the Snapdragon 810 (believed to have overheating issues), significantly improved performance via its custom Kryo CPU cores and Adreno 530 GPU, and up to 600Mbps download speeds via an integrated X12 modem. A recent FierceWireless article (has been taken down) indicated the X16, a modem delivering 1Gbps peak download speeds, would arrive in the summer of 2016.
- Shares have fallen to new 52-week lows.
- Update: Bernstein's Stacy Rasgon notes only some of the allegations made in a 2009 KFTC staff report regarding Qualcomm wound up being accepted by the commission. "At this point, we have no idea what the Commission will determine, nor what remedies might be imposed, and we would expect years of appeals before anything concrete (beyond fines) would occur. Nevertheless, the nature of the charges outlined in the Examiner’s report is likely going to cause additional angst among investors who are already worried about the long-term sustainability of Qualcomm’s licensing business..."
Nov. 5, 2015, 9:10 AM| Nov. 5, 2015, 9:10 AM | 32 Comments
Nov. 4, 2015, 6:29 PM
- Qualcomm (NASDAQ:QCOM) has fallen to $56.75 after hours after providing soft FQ1 EPS guidance (and in-line revenue guidance) to go with an FQ4 beat. At the midpoints, the guidance implies 21% Y/Y revenue and EPS declines.
- The company notes stronger-than-expected MSM chip shipments offset slower-than-expected progress in striking new Chinese licensing deals in FQ1 (a deal with ZTE was recently announced). A revenue mix shift towards chips from (higher-margin) royalties pressures EPS. Though not providing full FY16 revenue guidance, Qualcomm is guiding for QTL (licensing division) revenue of $7.3B-$8B vs. an FY15 level of $7.9B.
- Key metrics: FQ4 MSM shipments totaled 203M, -14% Y/Y but above guidance of 170M-190M. FQ1 shipments are expected to total 225M-245M (-9%-17% Y/Y). Reported 3G/4G device sales (from which royalties are collected) rose 2% Y/Y in FQ4 to $58.3B. They're expected to total $50B-$58B (-11% to +3% Y/Y) in FQ1. Estimated 3G/4G device ASP fell to $207-$213 from $220-$226 a year ago. Global 3G/4G device shipments are expected to rise 11%-17% in 2015 to 1.52-1.6B, and 7%-13% in 2016 to 1.67B-1.77B.
- Business performance: QCT (chip division) revenue fell 25% Y/Y in FQ4 to $3.6B (hurt by iPhone share gains and Samsung's use of Exynos processors in the Galaxy S6/Note 5); segment op. profit fell 73% to $280M. QTL revenue fell 1% to $1.8B; op. profit fell 3% to $1.5B. GAAP R&D spend fell slightly Y/Y to $1.36B; SG&A rose 9% to $595M.
- Financials/restructuring: $2.2B was spent to buy back 37.5M shares, and another $1.4B has been spent on buybacks thus far in FQ1. Qualcomm ended FQ4 with $30.9B in cash ($25.6B offshore), and $11B in debt. Thanks to job cuts, the company expects non-GAAP SG&A/R&D spend to drop 6%-8% in FY16. Qualcomm aims to lower its spending run rate by $1.1B/year by the end of FY16, and to cut annual stock compensation by $300M.
- FQ4 results/FQ1 guidance, PR, slides (.pdf)
Nov. 4, 2015, 4:08 PM
- Qualcomm (NASDAQ:QCOM): FQ4 EPS of $0.91 beats by $0.05.
- Revenue of $5.45B (-18.5% Y/Y) beats by $240M.
- Expects FQ1 revenue of $5.2B-$6B and EPS of $0.80-$0.90 vs. a consensus of $5.79B and $1.08.
- Annual revenue/EPS guidance will no longer be provided.
- Shares -1.3% after hours.
Oct. 26, 2015, 10:52 AM
- Apple suppliers Qualcomm (QCOM -2.9%), Cirrus Logic (CRUS -10.1%), Skyworks (SWKS -5.1%), Qorvo (QRVO -5%), Avago (AVGO -4.2%), Broadcom (BRCM -2.3%), NXP (NXPI -3.5%), InvenSense (INVN -2.1%), Synaptics (SYNA -4.4%), and Analog Devices (ADI -2.7%) are selling off after iPhone/iPad power management IC supplier Dialog Semi (down 18.8% in Frankfurt) reported 18% Y/Y Q3 revenue growth and guided for annual Q4 growth to be in a range of -1% to +6%. Both the Q3 sales and Q4 guidance missed consensus estimates.
- NXP merger partner Freescale (FSL -2.9%) is also lower. As is Atmel (ATML -8.1%), which is set to merge with Dialog in a cash/stock deal. Atmel was originally due to receive over half its payout in Dialog shares, whose value has fallen considerably since the deal was announced in mid-September.
- Broadcom, set to merge with Avago, reports after the bell. Apple reports tomorrow, and Cirrus, NXP, and InvenSense on Wednesday. With the help of improving demand and ongoing M&A, chip stocks had bounced strongly from their August/September lows in recent weeks.
Sep. 2, 2015, 1:33 PM
- After aggressively hiking their Ambarella (AMBA -12.9%) targets as shares soared well above $100 earlier this year, several firms have cut them following yesterday's FQ2 beat and in-line FQ3 guidance. However, no downgrades have arrived.
- "An in-line guide disappointed, as the typical beat and raise failed to play out this quarter," notes Ascendiant's David Williams. In addition to GoPro-related concerns, he thinks China fears are weighing on shares, but adds he believes Ambarella's Chinese exposure (includes security and auto cameras, as well as Xiaomi's Yi action camera) isn't huge.
- Pac Crest's Brad Erickson (Overweight rating, $123 target): "Timing and product mix affected AMBA's guidance, but we believe it remains sole-sourced at GoPro while the rest of the business is growing over 60% y/y ... China IP security paused in the quarter due to macro concerns and the company still beat revenue estimates, which highlights how diversified the business has become,"
- Canaccord's Matt Ramsay (Buy, target cut by $17 to $105): "[W]e maintain our belief Ambarella’s portfolio of highly differentiated application-specific video encode, compression, and analytics processors will maintain strong market share against SoC competition and positions the company for strong sales and earnings growth..." Morgan Stanley's Joseph Moore (Equal-Weight) dismisses fears of competition from Qualcomm (NASDAQ:QCOM), arguing a Qualcomm video SoC based on its mobile processors would be more expensive, more power-hungry, and consume more DRAM than Ambarella's SoCs.
- Regarding GoPro (GPRO -7.3%), Raymond James' Tavis McCourt (Outperform, target cut by $21 to $50) thinks Ambarella's guidance suggests there won't be a holiday season camera refresh, and that the Hero4 Session "was the company’s biggest product launch of the year." McCourt also notes Ambarella's sales to GoPro contract manufacturer Chicony have risen over 100% Y/Y (easily topping GoPro's shipment/revenue growth), and thinks this is a sign GoPro was stockpiling inventories the last 3 quarters.
- JMP's Alex Gauna (Outperform rating, $105 target on GoPro) has cut his GoPro Q3 estimates due to Ambarella's guidance. But he adds retail/online checks are in-line with seasonality, and show little evidence of competitive pressure. "[W]e would be buyers of GPRO on any potential weakness in sympathy with AMBA."
- Prior Ambarella coverage
Aug. 6, 2015, 9:53 AM
- Qualcomm (QCOM -0.5%), via its Atheros Wi-Fi/connectivity chip unit, is buying DSL modem/infrastructure IC and home gateway processor vendor Ikanos (NASDAQ:IKAN) for $2.75/share, or roughly $47M based on Ikanos' Q2 diluted share count. The price represents a 57% premium to Ikanos' Wednesday close. The deal is expected to close by year's end.
- Ikanos' products complement Qualcomm/Atheros home Wi-Fi and wireline networking offerings. Qualcomm: "The combination of Qualcomm Atheros' broad home gateway IP portfolio, including Wi-Fi, powerline, small cell, and Ethernet switch technologies, and Ikanos' advanced wired modem technology, is designed to create a complete solution for a wide range of home gateway products to better serve the carrier segment." Broadcom (NASDAQ:BRCM) and Marvell (NASDAQ:MRVL) are among the other companies competing in this space.
- Qualcomm CEO Steve Mollenkopf suggested last week his company would make new chip acquisitions.
Qualcomm Inc develops digital communication technology called CDMA (Code Division Multiple Access), & owns intellectual property applicable to products that implement any version of CDMA including patents, patent applications & trade secrets.
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