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.
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%.
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.
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
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.
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.
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.
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, 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
Tue, Apr. 21, 5:35 PM| Tue, Apr. 21, 5:35 PM | 6 Comments
Mon, Apr. 20, 5:39 PM
- Backing up industry speculation to the effect (as well as a 2014 Digitimes report that pointed in this direction), Re/code reports Qualcomm's (NASDAQ:QCOM) Snapdragon 820 baseband/app processor (its next-gen flagship) will be made using Samsung's (OTC:SSNLF) 14nm FinFET (3D transistor) manufacturing process. Qualcomm has historically relied on TSMC (NYSE:TSM) to make its most advanced processors, though it also does business with other foundries.
- The scoop follows a slew of reports stating Samsung's 14nm process will be used to manufacture at least a majority of Apple's A9 CPUs; KGI reported last week TSMC (set to ramp 16nm FinFET production) will handle 30% of A9 production after (Samsung 14nm partner) GlobalFoundries encountered yield issues.
- No word on whether Samsung will reward Qualcomm's decision by using the 820 in future high-end phones. Samsung opted to use its Exynos 7420 processor (also made using its 14nm process) instead of Qualcomm's Snapdragon 810 (made using TSMC's 20nm process) in the Galaxy S6, and is also using its own baseband modems in a large chunk of S6 units.
- The 820, which makes use of Qualcomm's next-gen Kryo CPU core and Zeroth neural networking tech, begins sampling in 2H15. The timetable suggests commercial hardware featuring the SoC could arrive in 1H16 (in time for the Galaxy S7?). Qualcomm's FQ2 report is due on Wednesday.
Mon, Apr. 13, 1:36 PM
- "[W]e think they ought to do just a transparent review, and determine whether it makes sense, but we are not definitely saying they should split it up," says Jana Partners' Barry Rosenstein on CNBC, after Jana issued a letter urging Qualcomm (QCOM -0.1%) to consider a breakup.
- Qualcomm considered spinning off its chip division (QCT) from its IP licensing division (QTL) in 2000 amid heated licensing talks with Nokia. Synergies exist between the businesses: Qualcomm's patent portfolio helps QCT obtain more favorable patent licensing terms from third parties, and R&D carried out by QCT adds to QTL's portfolio.
- Rosenstein is more insistent on wanting Qualcomm to up its buybacks. The company is just a month removed from announcing a new $15B buyback and promising to repurchase $10B worth of shares within 12 months, on top of a commitment to return 75% of free cash flow to shareholders. However, Rosenstein notes Qualcomm's cash balance is still equal to 30% of its market cap.
- Part of Rosenstein's argument for mulling a breakup: With Qualcomm trading at 9x EPS excluding cash, he thinks QCT has a "negative valuation" if one assigns a fair market value to QTL. "Obviously, it’s not worth a negative value ... We think they need to figure out what they can do to close that valuation gap."
- Qualcomm has responded to Jana's letter by highlighting its existing buyback efforts and stating "prior reviews have concluded that the synergies provided by our business model create more value for stockholders than could be created through alternative corporate structures."
- Jana's call comes as Andreessen Horowitz VC Scott Kupor argues the obsession of activist investors with near-term profits has hurt tech M&A activity. Qualcomm has been fairly acquisitive in recent years.
- After opening sharply higher, Qualcomm is now near breakeven.
Mon, Apr. 13, 2:18 AM
- Qualcomm (NASDAQ:QCOM) is now under pressure from activist investor Jana Partners to consider a breakup and other options to boost its sagging stock price.
- According to a quarterly letter reviewed by the WSJ, Jana is asking Qualcomm to consider spinning off its chip unit from its patent-licensing business, cut costs, accelerate stock buybacks and make changes to its executive-pay structure.
- Over the last year, Qualcomm shares have dropped over 11%.
Wed, Apr. 8, 10:03 AM
Mon, Apr. 6, 12:08 PM
- In a Markman hearing for Nvidia's (NVDA +1.1%) ITC infringement suit against Qualcomm (NASDAQ:QCOM) and Samsung, administrative law judge (ALJ) Thomas Pender has ruled "claim constructions favorable to NVIDIA will be applied to six out of seven disputed claims," Nvidia asserts.
- Pender will rely on the claim constructions to rule on Nvidia's infringement claims. The ITC commission typically provides a final decision a few months after an ALJ's ruling.
- Last year, Nvidia sued Qualcomm and Samsung for allegedly infringing "GPU patents covering technology including programmable shading, unified shaders and multithreaded parallel processing," via their Snapdragon and Exynos app processors; Samsung has filed countersuits. Nvidia competes against Qualcomm and (indirectly) Samsung via its Tegra processor line.
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.
QCOM vs. ETF Alternatives
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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