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Qualcomm Inc. (QCOM)

- NASDAQ
  • Tue, Jul. 7, 4:40 PM
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  • Wed, Jul. 1, 2:19 PM
    • Pac Crest's Andy Hargreaves: "Although we continue to expect iPhone (AAPL +0.6%) sales to decline in the coming refresh cycle, ongoing share gains should prevent the decline from being as severe as we previously expected ... We believe the majority of people earning $15,000 a year or more in the world will own an iPhone exiting F2015." His FY15 (ends Sep. '15) and FY16 iPhone sales estimates have been raised by 7M and 10M to 236M and 218M.
    • At the same time, Hargreaves has cut his FY15 and FY16 Apple Watch sales estimates by 0.5M and 3M to 10.5M and 21M. "Store visits, Google search volume, third-party data and recent supply checks all suggest demand for Apple Watch has fallen sharply from initial levels." He previously noted Apple Watch Google search activity is trailing the iPod's. Research firm Slice has estimated 2.79M U.S. Watch sales as of mid-June.
    • With the iPhone accounting for the lion's share of Apple's gross profit, Hargreaves, who has maintained a Sector Perform rating since last September, has upped his FY15 and FY16 EPS estimates by $0.28 and $0.34 to $9.41 and $9.29. Consensus is at $9.03 and $9.72.
    • Separately, 9to5 Mac has leaked pictures said to depict the iPhone 6S' case and circuit board. The pictures indicate the 6S will use Qualcomm's (QCOM -0.2%) MDM9x35 baseband modem, first announced in late 2013 and found in some Galaxy S5/S6 units. It has twice the peak download speed (300Mbps) of the MDM9x25 modem used in the iPhone 6/6+, and better power consumption. The MDM9x45, which tops out at 450Mbps, was unveiled last November ahead of 2015 commercial availability.
    • In-line with Apple's past "S" model upgrades, the leaked photos suggest the 6S will look similar to the 6 on the outside. Any difference in thickness/width for 4.7" models is reportedly "too minimal to notice."
    • Last week: Piper, Morgan Stanley provide bullish iPhone notes
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  • Tue, Jun. 30, 9:30 AM
    • "We've had that discussion for a long time, many years the board has looked at it but we still think the synergies of having the businesses together outweighs the dissynergies," Qualcomm (QCOM +0.3%) chairman/ex-CEO Paul Jacobs tells Reuters.
    • The remarks come after activist Jana Partners suggested in April it's in favor of Qualcomm spinning off its chip unit (QCT) from its IP licensing unit (QTL), arguing the former is deeply undervalued. Jana qualified its comments by stating it's not insisting on a breakup, and just wants a "transparent review" of the idea.
    • Keeping QCT and QTL under the same roof allows QCT to obtain more favorable chip patent licensing terms, and also allows R&D carried out by QCT to add to QTL's patent portfolio. QCT now accounts for a solid majority of Qualcomm's revenue, but QTL still accounts for a majority of its op. profit.
    • Yesterday: Drexel downgrades Qualcomm, cites growing price pressure
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  • 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.
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  • Wed, Jun. 24, 3:59 AM
    • Qualcomm (NASDAQ:QCOM) has struck a deal to help China's biggest semiconductor foundry upgrade its technology, as it looks to boost its standing in the country following a record $975M antitrust fine.
    • Under terms of the agreement, SMIC (NYSE:SMI) will form a joint venture with Qualcomm, Huawei Technologies and Belgian chip research center Imec to develop advanced 14-nanometer chips.
    • Qualcomm and SMIC collaborated last year on the production of 28-nanometer chips (the smaller the number, the more advanced the chip).
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  • Fri, Jun. 12, 6:51 PM
    • Qualcomm (NASDAQ:QCOM) has unveiled MuLTEfire, a solution for running 4G networks in unlicensed spectrum that's promised to feature "Wi-Fi-like deployment simplicity," while still providing some of the range and mobility benefits associated with mobile networks.
    • The solution is promoted as an alternative to LTE-U (backed by many carriers), which also works in unlicensed spectrum but (unlike MuLTEfire) requires an anchor in licensed spectrum. Since it doesn't need an anchor, MuLTEfire can be adopted by broadband ISPs, enterprises, venue owners, and others lacking licensed spectrum ... provided enough of a hardware and chip ecosystem is built around it.
    • Should a healthy ecosystem form, Qualcomm stands to benefit from MuLTEfire's adoption via chip sales and royalties for related hardware. In February, the company rolled out small cell base station chipsets and a mobile device RF transceiver that support LTE-U.
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  • Thu, Jun. 11, 4:01 AM
    • Qualcomm (NASDAQ:QCOM) has appointed old hand Frank Meng as its chairman for China, a market which accounts for half of the company's overall revenues, and announced the departure of Wang Xiang, president of Qualcomm Greater China.
    • The shakeup comes after a long stretch of turbulence for Qualcomm in the country. Following a 14-month government probe into antitrust practices, the company agreed to pay a fine of $975M, the largest in China's corporate history.
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  • Mon, Jun. 8, 11:43 AM
    • Following an EU decision to allow L-Band (1452MHz.-1492MHz.) spectrum to be used to provide mobile downlink capacity, Qualcomm's (QCOM -1.1%) U.K. subsidiary plans to unload its L-Band assets.
    • Qualcomm acquired 40MHz. of U.K. L-Band spectrum in 2008 for an £8.3M ($12.7M) license fee. It could get a lot more than that in a sale, given current spectrum prices. A 2013 U.K. auction of 250MHz. of spectrum in the 800MHz. and 2.6GHz. bands raised £2.34B ($3.58B).
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  • Fri, May 29, 1:19 PM
    • The planned merger of Broadcom (a major Qualcomm Wi-Fi/Bluetooth chip rival) and Avago (to some extent a Qualcomm rival in the RF chip market) will give phone suppliers more leverage against Qualcomm (QCOM -0.1%), predicts IDC's Mario Morales.
    • For his part, Drexel Hamilton's Richard Whittington thinks the pairing of Avago and Broadcom's server/networking product lines could impact Qualcomm's server CPU ambitions.
    • Of note: Neither Broadcom nor Avago competes in Qualcomm's core mobile baseband/app processor market; Broadcom shuttered its baseband ops last year to investor approval. Broadcom does plan to compete in the ARM server CPU market ... but so do several other firms.
    • Broadcom/Avago has also fueled speculation Qualcomm could respond with an acquisition of its own, and perhaps even try to trump Avago's Broadcom bid. If one was made, Broadcom and Qualcomm's joint Wi-Fi/Bluetooth combo chip share could draw antitrust scrutiny.
    • Shortly before Broadcom/Avago reports broke, Pac Crest speculated Qualcomm could bid for video processor vendor Ambarella. Last year, Qualcomm spent $2.5B to buy Bluetooth/audio chipmaker CSR.
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  • Wed, May 27, 6:48 PM
    • Pac Crest's Brad Erickson, discussing his most recent GoPro (NASDAQ:GPRO) channel checks : "Days of inventory declined m/m, and we believe [camera] sales run rates have increased recently, likely driven by incremental bundling with gift cards/memory cards, as well as a strong seasonal rebound associated with dads & grads." GoPro is a month removed from providing strong Q2 guidance.
    • Erickson, who also reported positive checks in early April, has hiked his target for video processor supplier Ambarella (NASDAQ:AMBA) by $18 to $96, and his FY16 (ends Jan. '16) and FY17 EPS estimates to $2.39 and $3.29 (above a consensus of $2.24 and $2.77).
    • He also speculates Qualcomm (NASDAQ:QCOM) could bid for Ambarella on account of Ambarella's low-power video-processing IP, and even suggests Qualcomm's recent $10B capital raise (will help pay for buybacks) has sparked broader speculation about a deal. "While we hadn't expected such substantive acquisition speculation this soon since going public, we believe such a deal could make both technology and financial sense in line with our views on the stock."
    • Erickson does caution Ambarella's big run-up suggests "expectations are very high" going into next Tuesday's FQ1 report. "As such, we'd be opportunistic buyers on any pullback in the name."
    • Thanks in part to a big chip stock rally fueled by Broadcom/Avago M&A reports, Ambarella rose 3.1% today, making new highs along the way. GoPro fell 0.2%.
    | 9 Comments
  • Thu, May 21, 9:17 AM
    • A week after launching a $10B debt offering to finance capital returns, Qualcomm (NASDAQ:QCOM) has announced a $5B accelerated share repurchase (ASR) deal with Goldman and Morgan Stanley, with an initial delivery of 57.7M shares (current value of $4.05B). (8-K filing)
    • CEO Steve Mollenkopf: "These repurchases represent a significant step towards meeting our goal of repurchasing $10 billion of common stock by March 2016, in addition to our commitment to return a minimum of 75 percent of free cash flow to stockholders through dividends and repurchases." Qualcomm launched a $15B buyback in March, and spent $1.9B on repurchases in FQ2.
    • QCOM +1.3% premarket to $70.16.
    | 4 Comments
  • Fri, May 15, 9:43 AM
    • Qualcomm (QCOM - unchanged) has priced an 8-part, $10B, debt offering to help pay for its aggressive buybacks. The offering consists of floating-rate notes due 2018 and 2020, and fixed-rate notes due 2018, 2020, 2022, 2025, 2035, and 2045. (prospectus)
    • Interest rates for the fixed-rate notes are respectively 1.4%, 2.25%, 3%, 3.45%, 4.65%, and 4.8%. Rates for the floating-rate notes are respectively 3-month LIBOR + 0.27% and 3-month LIBOR + 0.55%. Net proceeds are expected to total $9.9B, and be used for "general corporate purposes, which may include funding our capital return program and acquisitions."
    • Qualcomm promised in March to repurchase $10B worth of shares within 12 month, on top of a commitment to returning 75% of free cash flow to shareholders. Activist Jana Partners has been pushing for larger buybacks.
    • The company had $29.6B in cash/marketable securities at the end of March, and just $1.1B of debt. However, $26.2B of the cash was offshore.
    • Yesterday: Qualcomm trumpets IoT potential, unveils new Wi-Fi chips
    | 4 Comments
  • Thu, May 14, 7:19 PM
    • 5B non-smartphone connected devices will be sold by the end of 2018, Qualcomm (NASDAQ:QCOM) predicts at a press event highlighting its efforts to profit from the IoT chip market's rapid growth.
    • Qualcomm notes it expects to get over 10% of its FY15 (ends Sep. '15) chip sales for devices other than mobile phones. The company has cumulatively sold chips for 20M Web-connected cars, and its Atheros Wi-Fi/Bluetooth unit sold chips for 120M connected home devices last year.
    • Qualcomm/Atheros used the event to show off a pair of IoT-focused Wi-Fi chips - the QCA401x and QCA4531. The 401x, aimed at giving embedded device makers a small/low-power solution that can be quickly designed into hardware, comes with a built-in microcontroller and a communications protocol stack. The 4531 is aimed at more powerful devices: It contains a 650MHz. CPU, supports embedded Linux, and can function either as a Wi-Fi node or hub/access point.
    • Like Qualcomm, Intel, Broadcom, and Texas Instruments are also going after the IoT chip market with some mixture of CPU, Wi-Fi, and Bluetooth offerings, as well as integrated SoCs and modules. Samsung (OTC:SSNLF) recently launched Artik, a family of IoT hardware modules containing a CPU, memory, and related software tools. One Artik module supports Bluetooth, and another both Bluetooth and Wi-Fi.
    | 9 Comments
  • Sun, May 10, 3:28 PM
    • Reuters reports EU antitrust regulators have begun asking Qualcomm's (NASDAQ:QCOM) baseband chip rivals about its business practices and licensing deals. Regulators began probing the mobile/chip IP giant 7 months ago - 4 months before it settled with Chinese regulators.
    • Whereas Chinese regulators were widely seen as trying to secure lower royalty rates for local OEMs, EU regulators appear to be focusing on the links between Qualcomm's chip unit (QCT) and IP licensing unit (QTL - still responsible for over half of op. profit). They've reportedly asked chip rivals about the impact of practices such as pass-through licensing rights given to OEMs using Qualcomm's chips, as well as cross-licensing deals.
    • The report comes a few days after one more baseband rival - Nvidia - announced it's exiting the R&D-intensive market. Broadcom bowed out last year, and ST-Ericsson the year before. Earlier this year, Marvell suggested it's open to "strategic alternatives" for its baseband unit, while insisting it's "not going to back off" from the business.
    • Strategy Analytics estimates Qualcomm, buoyed by a dominant 4G/high-end position, had a 66% 2014 baseband revenue share. MediaTek and Spreadtrum were the market's #2 and #3 players.
    | 9 Comments
  • Mon, Apr. 27, 3:06 AM
    • As the country looks to reduce its reliance on foreign technology, Qualcomm (NASDAQ:QCOM) has launched a division to help Chinese smartphone makers sell units overseas, looking to build stronger relationships following its record $975M antitrust fine.
    • Qualcomm, which draws about half of its revenue from customers in China, established an office in Shenzhen last quarter to assist both small and large Chinese handset manufacturers build global businesses.
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  • 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)
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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.