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Qualcomm Inc. (QCOM)

  • Fri, Nov. 20, 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.
    | Fri, Nov. 20, 12:41 PM | 12 Comments
  • Wed, Nov. 18, 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..."
    | Wed, Nov. 18, 10:17 AM | 29 Comments
  • Thu, Nov. 5, 9:10 AM
    | Thu, Nov. 5, 9:10 AM | 32 Comments
  • Wed, Nov. 4, 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)
    | Wed, Nov. 4, 6:29 PM | 8 Comments
  • Wed, Nov. 4, 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.
    • Press Release (.pdf)
    | Wed, Nov. 4, 4:08 PM | 17 Comments
  • Mon, Oct. 26, 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.
    | Mon, Oct. 26, 10:52 AM | 19 Comments
  • Wed, Sep. 2, 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
    | Wed, Sep. 2, 1:33 PM | 10 Comments
  • Thu, Aug. 6, 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.
    | Thu, Aug. 6, 9:53 AM | 1 Comment
  • Fri, Jul. 31, 10:44 AM
    • ParkerVision (NASDAQ:PRKR) states a federal appeals court (the CAFC) has affirmed a 2014 district court ruling declaring the company didn't prove Qualcomm (NASDAQ:QCOM) infringed its patents.
    • The court has also "upheld the district court's decision denying Qualcomm's judgement as a matter of law ("JMOL") motion for invalidity with regard to claim 27 of [ParkerVision's] '518 patent but reversed the district court's decision with regard to Qualcomm's JMOL for invalidity on the remaining claims in the case."
    • CEO Jeffrey Parker: "We are highly disappointed with the appellate court's decision both with regard to infringement and validity of certain of our patent claims. Despite this setback, we will consider further options on appeal, and will move forward in our second infringement case against Qualcomm, HTC and Samsung."
    • ParkerVision nosedived prior to the company's official announcement, and was subsequently halted. Shares plunged in May after the CAFC heard oral arguments for ParkerVision's appeal.
    • Update (11:54AM ET): ParkerVision is down 38% after coming off a halt.
    | Fri, Jul. 31, 10:44 AM | 1 Comment
  • Wed, Jul. 22, 4:51 PM
    • Qualcomm's (NASDAQ:QCOM) strategic realignment plan aims to reduce annual spending by $1.4B. In addition to cutting 15% of its workforce, the company plans to lower costs by reducing annual stock compensation grants by $300M.
    • Confirming a recent WSJ report, Qualcomm adds it plans a review of its corporate/financial structure that includes "possible business separation alternatives" - presumably a reference to a potential split of QCT (chips) from QTL (licensing). Further capital returns and "other potential strategic and financial alternatives" will also be weighed. The review is expected to be finished by year's end.
    • As part of a deal with activist Jana Partners, Qualcomm has added two Jana-backed directors, Mark McLaughlin and Tony Vinciquerra, and plans to add another independent director. Donald Cruickshank won't stand for board re-election at the 2016 annual meeting; Raymond Dittamore won't stand at the 2017 meeting.
    • Qualcomm, which has a history of making big investments in non-core ventures (FLO TV, Globalstar, etc.), also says it's "reducing its investments outside of QTL and QCT and will focus these investments around the highest-return opportunities, including data centers, small cells and certain IoE verticals."
    • Guidance: Discussing its light FQ4 guidance (revenue is expected to be down 25%-40% Y/Y), Qualcomm notes chip sales continue to be impacted by "increased concentration in the premium tier" - a reference to iPhone share gains - as well as lower high-end chip sales from "a vertical customer" (presumably Samsung) and lower Chinese sell-through of certain phones containing high-end chips.
    • In addition, royalty revenue continues to be impacted by Chinese under-reporting (in spite of the February settlement). Qualcomm thinks "it will take time" to finish negotiations with certain Chinese OEMs. The company's FY15 (ends in September) forecast for reported 3G/4G device sales has been cut to $253B-$259B from $255B-$275B.
    • MSM shipments: 225M MSM chips were shipped in FQ3, flat Y/Y and towards the high end of a 210M-230M guidance range. However, shipments are expected to fall to 170M-190M (-19%-28% Y/Y) in FQ4.
    • Key numbers: QCT revenue fell 22% Y/Y in FQ3 to $3.85B; op. profit fell 74% to $289M. QTL revenue rose 7% to $1.93B; op. profit rose 7% to $1.65B. $5.4B was spent to buy back 63.7M shares. Qualcomm ended FQ3 with $35.2B in cash/investments, and $10.9B in debt.
    • After initially rising, shares have fallen to $62.75 AH.
    • FQ3 results/FQ4 guidance, PR
    | Wed, Jul. 22, 4:51 PM | 1 Comment
  • Wed, Jul. 22, 4:07 PM
    • Qualcomm (NASDAQ:QCOM): FQ3 EPS of $0.99 beats by $0.04.
    • Revenue of $5.83B (-14.4% Y/Y) misses by $20M.
    • Expects FQ4 revenue of $4.7B-$5.7B and EPS of $0.75-$0.95, below a consensus of $6.13B and $1.08.
    • Cutting 15% of workforce via strategic realignment plan.
    • Shares +1.9% AH.
    • Press Release
    • Update: Qualcomm finished AH trading down 1.3%.
    | Wed, Jul. 22, 4:07 PM | 24 Comments
  • Mon, Jul. 20, 9:50 PM
    • Shortly after The Information reported major layoffs are planned, the WSJ reports Qualcomm (NASDAQ:QCOM) is "expected to conduct a sweeping strategic review that will look at the possibility of a breakup." Board changes are also reportedly being considered.
    • The WSJ adds Qualcomm might announce it's considering a breakup and other options, such as bigger capital returns, when it posts FQ3 results on Wednesday afternoon. It cautions the company's plans are "in flux." Qualcomm has already launched huge buybacks, and even tapped debt markets to help finance them.
    • In April, activist Jana Partners called on Qualcomm to consider spinning off its chip unit (QCT) from its IP licensing unit (QTL). Chairman Paul Jacobs stated in late June the company has no such plans. There's speculation a spun-off QCT would participate more aggressively in the chip industry's M&A wave.
    • Qualcomm finished AH trading up 2.7% to $65.53.
    | Mon, Jul. 20, 9:50 PM | 5 Comments
  • Mon, Jun. 29, 8:23 AM
    • Less than 6 months after downgrading to Hold on Intel-related fears, Drexel Hamilton has downgraded Qualcomm (NASDAQ:QCOM) to Sell, and set a $55 target. This time around, the firm cites growing price competition.
    • Shares have fallen to $63.28 thanks to the downgrade and lower equity futures. They're now down 14% YTD, and trade for just 12.3x an FY16 (ends Sep. '16) EPS consensus of $5.13. The dividend yield is at 3%.
    • Update: More details here. Drexel's Rick Whittington states Apple, Samsung, and Chinese OEMs want price concessions, and that Intel and Samsung are getting "more aggressive" in their efforts to compete.
    | Mon, Jun. 29, 8:23 AM | 4 Comments
  • Wed, Apr. 22, 6:37 PM
    • Echoing its January remarks, Qualcomm (NASDAQ:QCOM) states it's cutting its chip division (QCT) outlook for the second half of FY15 due to "customer share shifts within the premium tier" that will lead to a mix shift towards baseband modems relative to Snapdragon baseband/app processors (a reference to Apple's share gains), and "a decline in our share at a large customer" (a reference to Samsung and its Galaxy S6 choices).
    • The company also says that while it settled with Chinese regulators in February, it thinks some Chinese licensees still aren't fully reporting device sales, and believes "it will take some time for licensees to decide whether to accept the new China terms or retain the terms of their existing agreements."
    • Thus, while Qualcomm expects 1.52B-1.6B 2015 3G/4G device sales (up from 2014's 1.37B), it's not providing guidance for 2015 reported sales. Guidance for FY15 reported device sales has been slightly hiked to $255B-$270B (+5%-13% Y/Y) from $245B-$270B.
    • The company has "initiated a comprehensive review of our cost structure to identify opportunities to improve operating margins." Jana Partners is likely pleased. FQ3 guidance implies a 9%-21% Y/Y sales drop, and revised FY15 guidance a range of -6% to +2%.
    • QCT revenue rose 5% Y/Y in FQ2 to $4.43B; op. profit rose 1% to $750M. IP licensing division (QTL) revenue rose 17% to $2.41B (calendar Q4 iPhone 6 sales provided a lift); op. profit rose 18% to $2.16B. R&D spend rose just 2% to $1.19B; SG&A spend fell 1% to $447M.
    • $1.9B was spent on buybacks in FQ2, and another $541M has been spent since. Qualcomm has promised to spend $10B on buybacks from March 2015-2016, on top of a promise to return at least 75% of free cash flow to shareholders.
    • QCOM -2.7% AH to $67.08.
    • FQ2 results/guidance, PR, earnings slides (.pdf)
    | Wed, Apr. 22, 6:37 PM | Comment!
  • Wed, Apr. 22, 4:07 PM
    • Qualcomm (NASDAQ:QCOM): FQ2 EPS of $1.40 beats by $0.07.
    • Revenue of $6.89B (+8.2% Y/Y) beats by $60M.
    • Expects FQ3 revenue of $5.4B-$6.2B and EPS of $0.85-$1.00, below a consensus of $6.5B and $1.14.
    • Expects FY15 (ends Sep. '15) revenue of $25B-$27B and EPS of $4.60-$5.00 vs. a consensus of $27.22B and $5.00.
    • 233M FQ2 MSM chip shipments, in-line with guidance of 220M-240M. 210M-230M shipments expected in FQ3.
    • Shares -1.1% AH.
    • Press Release
    | Wed, Apr. 22, 4:07 PM | 2 Comments
  • Mon, Apr. 6, 9:16 AM
    • Believing Samsung's plans to use its own baseband modems in AT&T's version of the Galaxy S6 signals the company's intent to "utilize proprietary baseband whenever and wherever possible," FBR's Chris Rolland has downgraded Qualcomm (NASDAQ:QCOM) to Market Perform, and cut his target by $8 to $72.
    • Rolland does think Verizon/Sprint S6 models will use Qualcomm modems. The downgrade follows a Chipworks teardown of an S6 model expected to go to multiple carriers featuring no Qualcomm chips, and a WSJ report stating Qualcomm will have a "meaningful" S6 modem share (no percentage was specified).
    • Shares have fallen to $66.50 premarket.
    | Mon, Apr. 6, 9:16 AM | 1 Comment
Company Description
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.