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Qualcomm Inc. (QCOM)

- NASDAQ
  • Mon, Feb. 9, 5:29 PM
    • While Qualcomm's (NASDAQ:QCOM) Chinese settlement calls for a 5% royalty rate on multimode 3G/4G devices and a 3.5% rate on other 4G hardware (for "3G and 4G essential Chinese patents"), the rates will be derived from a royalty base of 65% of a device's net selling price.
    • Qualcomm's royalty rates are typically derived from an OEM's full sales price. Apple, whose royalty payments are based on the hardware price charged to the company by its contract manufacturers, is a notable exception.
    • Existing Chinese licensees will have "an opportunity to elect to take the new [license] terms for sales of branded devices for use in China as of January 1, 2015."
    • As part of the settlement, Qualcomm has agreed to expand its existing partnership with Chinese foundry SMIC (NYSE:SMI). Qualcomm struck a deal with SMIC last summer covering the production of 28nm Snapdragon processors.
    • TSMC (NYSE:TSM), Qualcomm's primary foundry partner for many years, could see its sales to Qualcomm for older processors (where TSMC's manufacturing process lead relative to SMIC doesn't factor) affected by the SMIC provision.
    • QCOM now +3% AH. TSM -0.5%
    | 14 Comments
  • Mon, Feb. 9, 4:22 PM
    • Qualcomm (NASDAQ:QCOM) will pay RMB6.088B ($975M) to settle the Chinese government's antitrust probe, just a little less than the $1B reported by Reuters.
    • However, the company will get to charge a 5% royalty rate on 3G-capable devices (including multi-mode 3G/4G hardware, which account for a large % of Chinese 4G phones sold today) for access to "3G and 4G essential Chinese patents," 4G devices that don't support 3G CDMA or WCDMA networks will carry a 3.5% rate. However, the royalty is derived from a base of 65% of the device's net selling price.
    • Some fine print: Qualcomm will license its "essential Chinese patents" separately from other patents - that could mean 3G TD-SCDMA patents aren't covered - and negotiate cross-licenses in "good faith." It also won't "condition the sale of baseband chips on the chip customer signing a license agreement with terms that the NDRC found to be unreasonable or on the chip customer not challenging unreasonable terms in its license agreement." However, Qualcomm isn't obligated to sell chips to a non-licensee.
    • The company has also agreed to create "a China-specific investment fund of $150 million to further the development of mobile and semiconductor technologies." It already committed $40M to similar investments in December.
    • FY15 (ends Sep. '15) guidance has been hiked on the low end: Revenue guidance is now at $26.3B-$28B vs. $26B-$28B, and EPS guidance at $4.85-$5.05 vs. $4.75-$5.05.
    • QCOM +2.2% AH to $68.58.
    | 19 Comments
  • Mon, Feb. 9, 11:51 AM
    • "We believe this potential outcome is better than investors feared, and would be consistent with our modeling assumptions used for our F2016 pro-forma EPS estimates," says Canaccord's Mike Walkley (Buy, $84 target) following a Reuters report stating Qualcomm (NASDAQ:QCOM) is close to settling with Chinese regulators in exchange for a $1B fine, lower royalty rates, and licensing policy changes.
    • He had already assumed Qualcomm's rate on 5-mode (2G/3G/4G) Chinese phones would fall to 3.25% from 4.5%. Qualcomm typically collects a 3.25% royalty on 4G-only devices, but often gets a higher rate on 3G-capable hardware. Walkley: "With Qualcomm trading in the pre-market at roughly 12x (or 8.5X ex-cash) our F2016 pro forma EPS estimate, we believe the valuation is compelling for longer-term investors."
    • Qualcomm's Chinese troubles are a major reason the company has guided for FY15 EPS of $4.75-$5.05, down from FY14's $5.27. They led the company's licensing division revenue to fall 4% Y/Y in FQ1 to $1.8B, even as chip division sales rose 14% to $5.2B.
    | 4 Comments
  • Mon, Feb. 9, 5:49 AM
    • Qualcomm (NASDAQ:QCOM) is likely to pay China a record fine of around $1B to settle violations of a 2008 anti-monopoly law, Reuters reports.
    • The deal, which would likely see Qualcomm lower its royalty rates by around a third on patents used in China and would require the company to make changes to its licensing practices, could be announced as soon as today.
    • Previously: China to settle Qualcomm violations soon (Dec. 26 2014)
    | 11 Comments
  • Mon, Feb. 2, 4:47 PM
    • Hit hard last week due to its soft FY15 guidance, Qualcomm (NASDAQ:QCOM) gradually rallied today, closing with a 4.9% gain. Volume (21M shares) was well above a 3-month daily average of 12.3M.
    • Helping Qualcomm's cause: The company announced the Snapdragon 810, all but confirmed last week to be excluded from Samsung's Galaxy S6, has landed 60+ design wins, including for LG's G Flex2 and Xiaomi's Mi Note Pro. Other OEMs using Qualcomm's next-gen flagship baseband/app processor, which features 4 powerful 64-bit cores to go with 4 low-power cores, include Microsoft, Motorola (Lenovo), and OPPO.
    • Also: The WSJ has run a column noting Samsung's decision not to use the 810 was likely motivated at least in part by Samsung's wish to more frequently use its own Exynos processors within its hardware, rather than reported overheating issues.
    • Samsung is counting on the use of the 14nm manufacturing process it developed with Globalfoundries to give an Exynos processor expected to go into the S6 an app performance/power consumption edge; the 810 uses a 20nm TSMC process. Qualcomm, which has maintained a 4G modem performance edge over rivals, reportedly plans to use to use the 14nm process for upcoming processors.
    | 5 Comments
  • Thu, Jan. 29, 12:47 PM
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  • Thu, Jan. 29, 9:12 AM
    | 2 Comments
  • Wed, Jan. 28, 6:15 PM
    • Qualcomm (NASDAQ:QCOM) partly blames its soft FY15 (ends Sep. '15) guidance on "a shift in share among OEMs at the premium tier, which has reduced our near-term opportunity for sales of our integrated Snapdragon" processors." That's undoubtedly a reference to Apple, which (though using Qualcomm's 4G baseband modems and other ICs) relies on its home-grown A-series app processors, and just reported huge FQ1 iPhone sales.
    • The mobile chip/IP giant also cites "heightened competition in China," where its issues are well-known and MediaTek/Intel have been hungry to gain share, and "expectations that our Snapdragon 810 processor will not be in the upcoming design cycle of a large customer's flagship device." Bloomberg has reported Samsung won't use the 810 in its Galaxy S6 (ostensibly due to overheating issues), instead relying on its own (Exynos) processors.
    • In addition to a Snapdragon processor (the 805), Qualcomm supplies a 4G baseband modem and several other ICs for many Galaxy S5 models. It's unknown if Samsung, which has developed an app processor with an integrated 4G baseband, will be using similar Qualcomm parts in the S6.
    • On the bright side, Qualcomm says it has resolved a dispute with a Chinese licensee. But it still believes other Chinese licensees aren't fully complying with their obligations.
    • QCT (chip division) sales rose 14% Y/Y in FQ1 to $5.2B, and division op. profit rose 26% to $1.15B. With China taking a toll, QTL (licensing division) revenue fell 4% to $1.82B, and op. profit 5% to $1.58B.
    • $1.7B was spent on buybacks. Qualcomm ended FQ1 with $31.6B in cash/marketable securities (equal to 29% of its current market cap), and no debt. Shares are down to $65.32 AH.
    • FQ1 results, PR
    | 7 Comments
  • Wed, Jan. 28, 5:35 PM
     
    | 2 Comments
  • Wed, Jan. 28, 4:07 PM
    • Qualcomm (NASDAQ:QCOM): FQ1 EPS of $1.34 beats by $0.09.
    • Revenue of $7.1B (+7.3% Y/Y) beats by $160M.
    • Expects FQ2 revenue of $6.5B-$7.1B and EPS of $1.28-$1.40 vs. a consensus of $6.74B and $1.28.
    • Expects FY15 revenue of $26B-$28B and EPS of $4.75-$5.05 vs. a consensus of $27.81B and $5.21.
    • 270M FQ1 MSM chip shipments, at the high end of guidance of 250M-270M. 220M-240M expected in FQ2.
    • Shares -3.6% AH.
    • Press Release
    | 12 Comments
  • Tue, Jan. 27, 5:35 PM
  • Thu, Jan. 22, 3:17 AM
    | 7 Comments
  • Wed, Jan. 21, 3:18 AM
    • Dealing a blow to Qualcomm (NASDAQ:QCOM), Samsung Electronics (OTC:SSNLF) says it will not use the company's processors for its next version of the Galaxy S, Bloomberg reports.
    • Samsung, the world’s largest smartphone maker, tested a new version of Qualcomm’s Snapdragon chip, known as the 810, but decided not to use it.
    • The new Galaxy S is expected to debut in the first half of this year.
    | 23 Comments
  • Mon, Jan. 19, 3:07 PM
    • The Information reports Google (NASDAQ:GOOG) is nearing a deal to invest in Elon Musk-founded rocket/spacecraft maker SpaceX. One source says the funding round is "very large," and will assign SpaceX a $10B+ valuation.
    • The reported goal of the investment would be to "support the development of SpaceX satellites that could beam low-cost Internet around the globe to billions who don’t have it." Google was reported last June to be looking to spend anywhere from ~$1B to $3B+ on a satellite constellation providing Web access, and soon afterwards bought satellite imagery/analytics firm Skybox Imaging.
    • Musk and SpaceX, meanwhile, are just days removed from unveiling plans for an Internet venture involving hundreds of satellites traveling at a much lower orbit than most satellites (thus reducing latency). Musk: "The speed of light is 40 percent faster in the vacuum of space than it is for fiber. The long-term potential is to be the primary means of long-distance Internet traffic and to serve people in sparsely populated areas."
    • A Google/SpaceX effort would have competition: Qualcomm (NASDAQ:QCOM) and Richard Branson's Virgin Group just agreed to invest in OneWeb, a firm that plans to launch 648 broadband-capable low-orbit satellites.
    • OneWeb is led by Greg Wyler, an industry vet who once worked for Google and was later rumored to be talking with Musk. Musk now asserts SpaceX has an edge on OneWeb. "Greg and I have a fundamental disagreement about the architecture. We want a satellite that is an order of magnitude more sophisticated..."
    • Satellite services firms that could be affected: LORL, GSAT, IRDM, I, VSAT
    | 33 Comments
  • 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.
    | 12 Comments
  • 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.
    | 1 Comment
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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.