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Qualcomm Inc. (QCOM)

  • Fri, Jan. 16, 10:54 AM
    • Arguing Intel's (NASDAQ:INTC) manufacturing process lead threatens Qualcomm's (QCOM -0.5%) mobile processor share, Drexel Hamilton's Rick Whittington has downgraded the mobile chip/IP giant to Hold, and cut his target by $25 to $75.
    • Whittington observes Intel is now selling 14nm processors - its 14nm Cherry Trail tablet CPUs recently began shipping - while Qualcomm has just begun selling 20nm processors (made by TSMC). He adds top foundries are slow to ramp 14nm and 16nm FinFET processes - Samsung/Globalfoundries are rolling out the former, TSMC the latter - and that Intel "also appears set on commoditizing low-mid-range LTE [baseband modems] for incorporation in their mobile processor offerings, conjuring a price war."
    • Worth noting: 1) While Intel has begun offering powerful app processors that leverage advanced manufacturing processes, it hasn't launched high-end baseband/app processors that can take on Qualcomm's Snapdragon 800 series. 2) A large portion of Intel's low-end efforts - both for app processors and baseband/app processors - are tied to alliances with Chinese chipmakers who (like Qualcomm) rely on 3rd-party foundries.
    • Qualcomm is off modestly following the downgrade. FQ1 results arrive on Jan. 28.
  • Wed, Jan. 14, 9:24 AM
    • Qualcomm (NASDAQ:QCOM) declares $0.42/share quarterly dividend, in line with previous.
    • Forward yield 2.3%
    • Payable March 25; for shareholders of record March 4; ex-div March 2.
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  • Mon, Jan. 5, 8:09 PM
    • With the help of recently-acquired Wilocity, Qualcomm (NASDAQ:QCOM) plans to show off tri-band wireless home networking chipsets that support both 2.4GHz./5GHz. 802.11ac Wi-Fi and the nascent WiGig standard (uses 60GHz. short-range connections as a USB/HDMI replacement).
    • Qualcomm also states: 1) Its high-end Snapdragon 810 baseband/app processor (due in hardware in 1H15) now supports the Quick Charge 2.0 and WiPower wireless charging standards. 2) It's partnering with drug giant Novartis to offer "a global connectivity platform for collecting and aggregating medical device data during clinical trials."
    • A year after launching the Tegra K1 at CES, Nvidia (NASDAQ:NVDA) has unveiled the Tegra X1. The X1 uses a more advanced manufacturing process (20nm vs. 28nm), replaces the K1's Kepler GPU with a next-gen Maxwell GPU (a key differentiator), and pairs four powerful cores with four smaller/low-power ones (ARM's big.LITTLE architecture).  Nvidia, which has Tegra sales to the auto market grow rapidly, is also showing off two Tegra-powered "automotive computers."
    • Broadcom (NASDAQ:BRCM), battling with Qualcomm and others in the Wi-Fi chip market, has launched new 802.11ac chips for routers, broadband gateways, and set-tops - one is said to deliver up to a 4x speed boost through the use of MU-MIMO - as well as a dual-core network processor for Wi-Fi routers.
    • Other Broadcom launches: 1) An NFC chip for cars. 2) An automotive Ethernet chip declared to be the industry's most power-efficient. 3) A satellite device for outdoor units that supports up to 32 set-tops.
    • Atmel (NASDAQ:ATML) has launched new ARM-based microcontrollers for wearables and managing sensor hubs, and a Bluetooth IC for embedded/wearable devices said to deliver unmatched dynamic power draw and sub-1µA standby power draw.
    • Prior CES news
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  • Dec. 26, 2014, 1:59 AM
    • Chinese antitrust officials have announced that they will settle a drawn-out investigation into Qualcomm (NASDAQ:QCOM) soon, after completing the seventh round of discussions with the company earlier this month.
    • The regulator said in February that the U.S. chipmaker was suspected of overcharging and abusing its market position in wireless communication standards.
    • Qualcomm is facing a fine of more than $1B, and may be required to agree to concessions that would limit its ability to charge licensing fees on phone chipsets that use its patents.
    • Previously: Qualcomm's regulatory problems extend beyond China (Nov. 06 2014)
    • Previously: China talks to South Korea over Qualcomm violations (Aug. 21 2014)
  • Dec. 16, 2014, 5:36 PM
    • Pres. Obama recently pressed Chinese president Xi Jinping about attempts by Chinese regulators to limit the royalties collected by foreign companies for the use of their IP.
    • National Security Council spokesman Patrick Ventrell: "The United States government is concerned that China is using numerous mechanisms, including anti-monopoly law, to lower the value of foreign-owned patents and benefit Chinese firms employing foreign technology ... President Obama raised these concerns."
    • Though Obama reportedly didn't mention Qualcomm (NASDAQ:QCOM) by name, it's the only major U.S. company currently subject to a Chinese antitrust probe related to royalty rates.
    • While the probe continues, Qualcomm has stated it thinks Chinese licensees are under-reporting sales of royalty-bearing devices, and that some might be holding off on getting licenses. The company's light FY15 guidance had much to do with its Chinese licensing issues.
    • The White House's efforts could also have implications for InterDigital (NASDAQ:IDCC), which has seen its own Chinese royalty-collection issues. China's antitrust regulator suspended a probe of InterDigital in May after the company made a series of licensing commitments.
    • Prior Qualcomm/China commentary
  • Dec. 12, 2014, 2:01 PM
    • Qualcomm (QCOM -0.9%) is spreading $40M between four Chinese tech companies and a Chinese semiconductor fund run by Walden Venture Investments.
    • The companies: 7Invensun, an eye-tracking tech developer; Chukong Technologies, a mobile entertainment publishing platform; inPlug, a smart home networking tech developer; and Unisound, a voice recognition middleware provider.
    • The investments might in part be a goodwill gesture, as Qualcomm continues facing off against Chinese regulators over 4G royalty rates. This year has seen rival Intel partner with Chinese app processor vendor Rockchip, and buy stakes in government-backed baseband processor vendors Spreadtrum and RDA Microelectronics.
  • Dec. 10, 2014, 12:40 PM
    • Qualcomm (QCOM -1.1%) is laying off slightly less than 300 employees in California and a similar number overseas, a spokesperson tells CNET. The layoffs cover ~2% of the mobile chip/IP giant's workforce (31.3K at the end of September).
    • The job cuts follow an FQ4 miss and softer-than-expected FY15 guidance. However, the numbers had more to do with Chinese regulatory/licensing challenges than any issues within Qualcomm's chip unit (QCT), which accounts for the lion's share of its workforce.
    • The company also carried out layoffs last year, and has been generally running a tighter ship since George S. Davis became CFO in March 2013. Cost controls helped QCT's op. profit rise 49% Y/Y in FQ4 (compares with 9% revenue growth).
  • Dec. 4, 2014, 5:23 PM
    • Silicon Image (NASDAQ:SIMG) has formed Qterics, a subsidiary containing its UpdateLogic device management services business (acquired in May) along with related software and IP assets.
    • Qualcomm (NASDAQ:QCOM) had paid $7M for a 7% stake in Qterics, and will partner with SIMG to "explore opportunities to collaborate on promoting the AllJoyn open-source software framework and developing new Internet of Everything (IoE) services."
    • UpdateLogic's core service (NetReady) is focused on managing home devices such as TVs, set-tops, tablets, and gaming consoles. However, its offerings can also be applied to managing a variety of outdoor and business devices.
    • SIMG: "As the Internet of Everything grows, the task of providing device management services to these connected devices in a secure manner becomes exponentially more difficult. Qterics solves these challenges in a very elegant way."
    • SIMG +3% AH.
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  • Nov. 21, 2014, 5:47 PM
    • Qualcomm (NASDAQ:QCOM) has sold its Taiwanese Mirasol display plant to TSMC (NYSE:TSM) for $85M, per a TSMC regulatory filing.
    • Taiwanese media previously reported Qualcomm was set to sell the plant, which it once planned to invest up to $975M in, and that TSMC wanted to use it to expands its chip assembly/testing ops.
    • Meanwhile, the sell-side has been busy debating Qualcomm's analyst day guidance and commentary, with much of the attention on focused on the company's China remarks. Cowen's Tim Arcuri is somewhat encouraged. "The company provided no new substantive regulatory (NDRC/FTC/EU) updates, but seemed to strike a more definitive tone about ultimately collecting royalties on 'substantially all LTE devices.'"
    • That, in turn, makes Arcuri think the most likely outcome for the China dispute is "some combination of a fine, potential changes in the royalty rate structure for all of [Qualcomm's] licensees operating in China, and/or increased investment in the local China semiconductor supply chain."
    • Bernstein's Stacy Rasgon is less positive. "We do not believe the near-term regulatory issues (particularly China) are truly the primary issue anymore ... The bigger issue being how the rise of China, at scale, is changing the overarching market dynamics that Qualcomm plays."
  • Nov. 19, 2014, 2:32 PM
    • After previously hinting it would do so, Qualcomm (QCOM -2%) has confirmed it plans to enter the budding ARM server CPU market. The company estimates the opportunity will be worth $15B by 2020, thanks in part to strong demand from Internet giants.
    • AMD, Marvell, Texas Instruments, Cavium (CAVM -1.7%), and AppliedMicro (AMCC -4.1%) have already unveiled ARM server CPUs. CEO Steve Mollenkopf argues Qualcomm's ability to quickly adopt next-gen manufacturing processes will give it an edge. For now, Intel, which maintains a process lead over the foundries relied upon by ARM vendors, still controls the lion's share of the server CPU market.
    • Qualcomm has also used its analyst day to unveil the Gobi 9x45, its 5th-gen LTE baseband modem. With the help of carrier aggregation, the 9x45 (due in 2015) supports max speeds of 450Mbps; the prior-gen 9x35 tops out at 300Mbps.
    • The 9x45 is also said to deliver improved power consumption, and require less board space. A new version of Qualcomm's complementary envelope-tracking IC (lowers power draw) has been announced as well.
    • Qualcomm still dominates the LTE baseband market, and is generally viewed as maintaining an edge in performance and frequency band support. But competition has picked up in recent quarters, thanks to new baseband launches from Intel, Samsung, and Nvidia.
    • Earlier: Qualcomm lower after setting long-term targets
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  • Nov. 19, 2014, 10:15 AM
    • Qualcomm (QCOM -1.2%) guides at its 2014 analyst day for an 8%-10% revenue CAGR from FY14 (ended in September) to FY19. The company adds it aims to grow EPS faster than revenue, and to return 75% of its free cash flow to shareholders.
    • Qualcomm has set an 85%-86% near-term op. margin target for its licensing unit (QTL), and an 86%-88% long-term target. The chip division (QCT) has been given an 18%-20% near-term op. margin target, and a 20%-22% long-term target. QTL and QCT respectively had 87% and 20% op. margins in FY14.
    • With Chinese payments remaining an issue, QTL is expected to have FY15 revenue of $7.3B-$8.3B vs. $7.6B in FY14. 3G/4G devices sales are expected to rise 7%-8%, and ASPs to fall 9%-10%.
    • QCT's revenue is expected to rise to $19.3B-$20.3B from FY14's $18.7B. MSM chip ASP is expected to fall 3%-5% due to a mix shift towards emerging markets and "premium tier mix challenges" - the latter could be a reference to the fact Apple (unlike Samsung) exclusively relies on its own app processors, albeit while relying on Qualcomm for basbeband modems and other ICs.
    • Qualcomm sold off two weeks ago after missing FQ4 estimates and providing light FQ1/FY15 guidance.
    • Analyst day slides (.pdf)
  • Nov. 10, 2014, 3:55 PM
    • Taiwan's Economic Daily News reports Qualcomm (QCOM +0.1%) is set to sell a plant in Longtan, Taiwan to top foundry partner TSMC (TSM +2%) for "several billion [Taiwanese] dollars." One U.S. dollar is equal to 30.59 Taiwanese dollars.
    • Back in 2011, Qualcomm announced plans to invest up to $975M to build a plant in Longtan to manufacture Mirasol color e-ink displays. But the following year, the company declared it was ending Mirasol production due to manufacturing challenges. TSMC reportedly wants to use the plant to expand its chip packaging/testing ops.
    • Separately, TSMC has reported its October sales: With the help of strong Apple A8 CPU orders, revenue rose 7.9% M/M and 55.9% Y/Y to NT$80.74B ($2.64B). The company previously forecast total Q4 sales of NT$217B-$220B, good for 4%-5% Q/Q growth.
  • Nov. 6, 2014, 3:24 PM
    • Qualcomm (QCOM -9.3%) has received one downgrade (from Atlantic Equities) and a slew of target cuts after missing FQ4 estimates, issuing light FQ1/FY15 guidance, and disclosing U.S. and EU regulators have joined their Chinese counterparts in launching probes.
    • Regarding the FTC, Qualcomm says the agency is probing whether licensing policies violate FRAND terms, and that it could issue a fine or (notably) order policy changes. Qualcomm collects a ~3.25% royalty on 4G-only devices, and often gets a 4%-5% royalty on devices with 3G radios (e.g. most phones sold today).
    • Not surprisingly (given its July remarks about Chinese non-payment), IP licensing weakness was responsible for Qualcomm's FQ4 miss. The licensing division (still responsible for over half of op. profit) saw revenue fall 4% Y/Y to $1.8B, and op. profit drop 5% to $1.6B. By contrast, the chip division's revenue rose 9% to $4.8B, and (thanks in part to cost cuts) its op. profit rose 49% to $1.05B.
    • With China still a question mark, Qualcomm has set a conservative FY15 (ends Sep. '15) forecast for reported royalty-bearing device sales of $240B-$270B (-1% to +11% Y/Y). FQ1 reported device sales are expected to be down 4%-14% Y/Y.
    • "[Chinese] royalty discounts are not a question of if, but only a question of when and how much," thinks BofA/Merrill (Neutral) after meeting with local firms and regulators. Rosenblatt Securities offers a similar take.
    • Canaccord (Buy), however, thinks a poor Chinese outcome is now priced in. "With Qualcomm trading ... at 14x or 10x ex-cash our updated F2015 pro forma EPS estimate that excludes 266M 3G/4G devices from Chinese OEMs in our [licensing division] revenue estimate, we believe the valuation is compelling."
    • Cowen and RBC thinks Qualcomm might opt to raise debt to fund larger buybacks. $1.2B was spent on buybacks in FQ4, and $4.55B over the whole of FY14.
  • Nov. 6, 2014, 9:14 AM
  • Nov. 6, 2014, 2:40 AM
    • Along with weak FQ4 results, Qualcomm (NASDAQ:QCOM) has disclosed that it is being investigated over regulatory problems in the U.S. and Europe.
    • The probes come on top of its antitrust issues in China, where it could face a fine of more than $1B from the NDRC.
    • Qualcomm says it now faces a probe by the European Commission over financial incentives of its chip sales, and a preliminary investigation by the FTC over its licensing business.
    • QCOM -5.6% AH
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  • Nov. 5, 2014, 4:07 PM
    • Qualcomm (NASDAQ:QCOM): FQ4 EPS of $1.26 misses by $0.05.
    • Revenue of $6.69B (+3% Y/Y) misses by $330M.
    • Expects FQ1 revenue of $6.6B-$7.2B and EPS of $1.18-$1.30, below a consensus of $7.39B and $1.43.
    • Expects FY15 revenue of $26.8B-$28.8B and EPS of $5.05-$5.35, below a consensus of $28.9B and $5.58.
    • 236M FQ4 MSM chip shipments, in-line with guidance of 230M-245M. 250M-270M shipments expected in FQ1.
    • Shares -3.9% AH.
    • Press Release
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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.