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Qualcomm Inc. (QCOM)

  • 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)
  • 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.
  • Sep. 19, 2014, 9:36 AM
    • iFixit's teardown of the iPhone 6 Plus turned up five Qualcomm (NASDAQ:QCOM) chips, up from the three found in last year's teardown of the 5S and nearly matching the six found in certain Galaxy S5 teardowns.
    • In addition to the expected Cat-4 LTE baseband modem, a Qualcomm power management IC, RF transceiver, receive-only chip (needed to enable LTE carrier aggregation), and envelope-tracking IC (relatively new, improves battery life) were found in the 6 Plus.
    • In-line with rumors and the company's hints, an InvenSense (NYSE:INVN) motion sensor - specifically, a 6-axis gyroscope/accelerometer - was found. That suggests InvenSense has displaced STMicroelectronics (NYSE:STM) as the iPhone's motion sensor supplier.
    • Two Skyworks (NASDAQ:SWKS) power amplifier modules are found, including a low-band LTE part. Avago (NASDAQ:AVGO) has both a high-band amplifier module, and an integrated ultra high-band amplifier/FBAR filter module. TriQuint (NASDAQ:TQNT) can claim a 3G amplifier module, and merger partner RF Micro (NASDAQ:RFMD) an antenna switch module.
    • Broadcom (NASDAQ:BRCM) appears to remain the iPhone's combo chip supplier (courtesy of a module from partner Murata), and also supplies a touch controller IC. Chipworks thinks Broadcom also has the Wi-Fi slot for the Apple Watch.
    • As expected, NXP (NASDAQ:NXPI) is supplying an NFC module and the M8 motion co-processsor, and Cirrus Logic (NASDAQ:CRUS) the audio codec IC. Texas Instruments (NASDAQ:TXN) is providing a touch transmitter IC.
    • Moving in response: INVN +1.9%. AVGO +1.5%. STM -3.9%.
  • Sep. 18, 2014, 1:56 PM
    • Ericsson (ERIC +4.5%) is joining Broadcom and Texas Instruments in exiting an R&D-intensive mobile baseband modem market dominated by Qualcomm (QCOM +0.6%) and MediaTek. The mobile infrastructure giant says it will discontinue baseband development, and direct some of the resources to base station R&D.
    • ~500 workers will be added to Ericsson's mobile radio network teams. With the baseband unit currently having 1,582 workers, that suggests over 1K jobs could be cut. For reference, Ericsson estimates its 2014 baseband R&D spend will be SEK2.6B ($366M).
    • Shares are up strongly on the news. Ericsson's baseband ops (focused on 4G modems) stem from the winding down of its ST-Ericsson JV last year.
    • In addition to MediaTek, Qualcomm still faces baseband competition from Intel, Nvidia, Spreadtrum, Marvell, and (indirectly) Samsung. While MediaTek and Spreadtrum are profitable, Intel's mobile unit (also covers app processors) has been posting big losses, and (though the companies don't break out the numbers) analysts have estimated Nvidia and Marvell's baseband ops are producing little or no profit.
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  • Sep. 16, 2014, 1:13 PM
    • China's investigation of Qualcomm (QCOM +0.9%) is nearing an end and about to enter the "punishment phase," says analyst Stacy Rasgon, basing his view on "news flow" over the past few days.
    • The result, he says, is likely to lead to changes in the company's business practices, noting among the charges is Qualcomm's charging of royalties based on the value of the device itself. The changes, then, might see Qualcomm matching its royalty rate to the value of the chips instead.
    • These sorts of resolutions take time, reminds, Rasgon, in which Qualcomm would have to submit proposals, and then Beijing would vet them, getting input from OEMs. He reiterates his Market Perform rating.
  • Sep. 4, 2014, 4:38 PM
    • Nvidia (NASDAQ:NVDA) alleges Qualcomm's (NASDAQ:QCOM) Snapdragon processors and Samsung's Exynos processors infringe "GPU patents covering technology including programmable shading, unified shaders and multithreaded parallel processing." Complaints have been filed at a Delaware district court and the ITC.
    • A number of Samsung phones/tablets relying on Qualcomm and/or Samsung processors are featured in the complaint, including the Galaxy S5, Note 4, Tab S, and Tab 2.
    • Qualcomm's processors feature proprietary Adreno GPU cores, while Samsung's rely on cores developed by ARM and Imagination. Nvidia's Tegra processor line competes against Qualcomm and (indirectly) Samsung's offerings.
    • Nvidia already has a multi-year patent licensing deal with Intel that nets the company $66M/quarter. Last year, Nvidia announced it's willing to license its Kepler GPU architecture to third parties. Interest has been limited thus far.
    • Given its giant patent portfolio, Qualcomm might be tempted to file a countersuit.
    • Shares +0.5% AH.
  • Sep. 3, 2014, 10:13 AM
    • As rumored, Samsung's (OTC:SSNLF, OTC:SSNGY) Galaxy Note 4 sports a 5.7" quad-HD (2560x1440) display; the Note 3 has a 1080p display. Other improvements include a revamped S Pen (twice the pressure sensitivity, among other things), a metal rim, and the addition of optical image stabilization, a fingerprint scanner, and a heart rate sensor.
    • The U.S. version will run on Qualcomm's (QCOM +0.8%) high-end Snapdragon 805 processor (2.7GHz., quad-core) and support Cat-6 LTE; the Note 3 uses the Snapdragon 800. Some international models will use Samsung's Exynos 5433 processor (1.9GHz., 8-core) and only support Cat-4 LTE. The 5433 beat the 805 in some early benchmarks.
    • Samsung has also launched the Note Edge, a phone with combines most of the Note 4's specs with a display that curves downwards at the sides. Samsung argues the edges of the display can be used to quickly glance at information while the phone is lying on a table.
    • Samsung, which pioneered the phablet market 3 years ago, is counting on the Note 4/Edge to both counter hungry Chinese OEMs that have been grabbing share, and deal with the pending launch (per numerous reports) of a 5.5" iPhone 6. The company still maintains a high phablet share in the U.S.
    • Universal Display (OLED +1.4%) benefits from Samsung's use of a quad-HD display, since the panel requires more OLED materials than a 1080p display.
  • Aug. 29, 2014, 5:55 PM
    • Amir Faintuch, the president of Qualcomm's (NASDAQ:QCOM) Atheros Wi-Fi/connectivity chip unit, has been hired by Intel (NASDAQ:INTC) to be an SVP/co-GM for its Platform Engineering Group (handles chip R&D).
    • Intel spokesman Chuck Mulloy talks up Faintuch's expertise in SoC development - though best known for its Wi-Fi offerings, Atheros' product line now also covers Bluetooth, GPS, and home networking ICs, as well as Wi-Fi/Bluetooth combo chips.
    • Intel's bio page currently shows 3 Platform Engineering GMs: Rani Borkar, Aicha Evans, and Joshua M. Walden. However, each has the title of VP rather than SVP.
    • Qualcomm is only a year removed from seeing Faintuch's predecessor, Craig Barratt, leave for Google. More recently, the company saw business development/Qualcomm Labs chief Peggy Johnson leave for Microsoft.
    • Separately, Intel has launched new Core i7 Extreme Edition CPUs. Though the 22nm chips are (high-margin) niche products meant for gaming rigs and low-end workstations, they're notable for being the first Intel desktop CPU line to support eight cores and DDR4 RAM (previous). Pricing ranges from $389-$999.
    • Update: Reuters has updated its column to state Faintuch will co-manage the Platform Engineering Group with Walden.
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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.