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Qualcomm Inc. (QCOM)

  • 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
  • Oct. 21, 2014, 12:13 PM
    • Google (GOOG +0.2%) has led a $542M funding round in Magic Leap, a secretive augmented reality startup promising to deliver 3D imagery that's far more lifelike than that provided by current virtual reality solutions, such as Facebook's Oculus Rift. Other investors include Qualcomm (NASDAQ:QCOM), film studio Legendary Entertainment, and VC firms Kleiner Perkins and Andreessen Horowitz.
    • Re/code reports "a key part of Magic Leap’s plans involves a wearable device that will track users’ eyeballs and project images onto them." It adds the company "intends to use an infrared camera similar to the Microsoft Kinect to create a 3-D understanding of the world around the wearer — so the virtual objects can appear to go both in front of and behind things." By contrast, Oculus relies on standard displays to project a flat, panoramic image.
    • Google reportedly doesn't have any current plans to integrate Magic Leap's tech with Google Glass. In February, the company launched Tango, an augmented reality solution for Android phones that can track motion and create visual maps of a user's surroundings.
  • Oct. 16, 2014, 9:40 AM
    • Qualcomm (NASDAQ:QCOM) declares $0.42/share quarterly dividend, in line with previous.
    • Forward yield 2.36%
    • Payable Dec. 18; for shareholders of record Dec. 1; ex-div Nov. 26.
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  • Oct. 15, 2014, 3:17 AM
    • Qualcomm (NASDAQ:QCOM) has agreed to acquire U.K. chip maker CSR (OTCQB:CSRXF) for £1.56B ($2.5B) in a deal that values the latter's shares at 900 pence each, or a 37% premium to its closing price of 658.5 pence yesterday.
    • Qualcomm CEO Steven Mollenkopf said that CSR's Bluetooth and audio processing technology "will strengthen Qualcomm's position in providing critical solutions that drive the rapid growth of the Internet of Everything, including business areas such as portable audio, automotive and wearable devices."
    • CSR's shares are +33% at 878.08 pence in London. (PR)
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  • Oct. 14, 2014, 2:47 PM
    • Qualcomm (QCOM +2.4%), NXP (NXPI +5.8%), Synaptics (SYNA +3.1%), and Himax (HIMX +3.5%) are among the mobile chipmakers outperforming after Skyworks hiked its calendar Q3 guidance.
    • Like Skyworks, Qualcomm, NXP, and (via the Renesas SP deal) Synaptics are iPhone suppliers. Recent reports have pointed to strong iPhone 6 build activity and Chinese pre-orders.
    • Like many other chipmakers, the group sold off after Microchip (has relatively low mobile exposure, but a diversified customer base otherwise) issued a calendar Q3 warning, and stated it believes an industry correction has begun. Intel reports after the close.
  • Oct. 8, 2014, 6:16 PM
    • While Samsung warns of another weak quarter, Xiaomi states its shipments rose 20% Q/Q in Q3. With Q2 sales having totaled 15M, that implies a Q3 level of 18M.
    • The Chinese Android vendor, known for borrowing a page or three from Apple, has already passed Samsung as China's top smartphone OEM. With the help of non-Chinese expansion, Xiaomi expects to ship 60M smartphones this year, and 100M in 2015. For reference, IDC has forecast 2014 industry shipments will total 1.2B.
    • FBR argued today Xiaomi's growth is a huge opportunity for Qualcomm (NASDAQ:QCOM), which has made a VC investment in the OEM. The firm estimates Qualcomm sells $50 worth of chips per Xiaomi phone, making for a $3B/year opportunity.. Xiaomi's flagship Mi4 (launched in July) features a Snapdragon 801 processor.
    • SA author Alcaraz Research stated last month Xiaomi's growth is a boon for Qualcomm, which has had its share of Chinese issues this year.
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  • Sep. 26, 2014, 7:39 AM
    • Intel (NASDAQ:INTC) confirms it will invest up to $1.5B for a 20% stake in a holding company established by the Chinese owners of wireless chipmakers Spreadtrum and RDA Microelectronics, and that it will work with the company to "expand the product offerings and adoption for Intel-based mobile devices in China and worldwide by jointly developing Intel Architecture and communications-based solutions for mobile phones.”
    • INTC will work with Spreadtrum to develop and sell system-on-a-chip processors based on INTC's instruction set architecture, for mobile phones, to be made available in H2 2015.
    • INTC is battling entrenched makers of baseband and mobile processors Qualcomm (NASDAQ:QCOM) and Taiwan’s MediaTek in the highly competitive China market.
    • Earlier: Reuters: Intel taking stakes in China's Speadtrum, RDA Micro.
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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.