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Qualcomm Inc. (QCOM)

  • Wed, Sep. 2, 1:33 PM
    • After aggressively hiking their Ambarella (AMBA -12.9%) targets as shares soared well above $100 earlier this year, several firms have cut them following yesterday's FQ2 beat and in-line FQ3 guidance. However, no downgrades have arrived.
    • "An in-line guide disappointed, as the typical beat and raise failed to play out this quarter," notes Ascendiant's David Williams. In addition to GoPro-related concerns, he thinks China fears are weighing on shares, but adds he believes Ambarella's Chinese exposure (includes security and auto cameras, as well as Xiaomi's Yi action camera) isn't huge.
    • Pac Crest's Brad Erickson (Overweight rating, $123 target): "Timing and product mix affected AMBA's guidance, but we believe it remains sole-sourced at GoPro while the rest of the business is growing over 60% y/y ... China IP security paused in the quarter due to macro concerns and the company still beat revenue estimates, which highlights how diversified the business has become,"
    • Canaccord's Matt Ramsay (Buy, target cut by $17 to $105): "[W]e maintain our belief Ambarella’s portfolio of highly differentiated application-specific video encode, compression, and analytics processors will maintain strong market share against SoC competition and positions the company for strong sales and earnings growth..." Morgan Stanley's Joseph Moore (Equal-Weight) dismisses fears of competition from Qualcomm (NASDAQ:QCOM), arguing a Qualcomm video SoC based on its mobile processors would be more expensive, more power-hungry, and consume more DRAM than Ambarella's SoCs.
    • Regarding GoPro (GPRO -7.3%), Raymond James' Tavis McCourt (Outperform, target cut by $21 to $50) thinks Ambarella's guidance suggests there won't be a holiday season camera refresh, and that the Hero4 Session "was the company’s biggest product launch of the year." McCourt also notes Ambarella's sales to GoPro contract manufacturer Chicony have risen over 100% Y/Y (easily topping GoPro's shipment/revenue growth), and thinks this is a sign GoPro was stockpiling inventories the last 3 quarters.
    • JMP's Alex Gauna (Outperform rating, $105 target on GoPro) has cut his GoPro Q3 estimates due to Ambarella's guidance. But he adds retail/online checks are in-line with seasonality, and show little evidence of competitive pressure. "[W]e would be buyers of GPRO on any potential weakness in sympathy with AMBA."
    • Prior Ambarella coverage
    | Wed, Sep. 2, 1:33 PM | 8 Comments
  • Thu, Aug. 6, 9:53 AM
    • Qualcomm (QCOM -0.5%), via its Atheros Wi-Fi/connectivity chip unit, is buying DSL modem/infrastructure IC and home gateway processor vendor Ikanos (NASDAQ:IKAN) for $2.75/share, or roughly $47M based on Ikanos' Q2 diluted share count. The price represents a 57% premium to Ikanos' Wednesday close. The deal is expected to close by year's end.
    • Ikanos' products complement Qualcomm/Atheros home Wi-Fi and wireline networking offerings. Qualcomm: "The combination of Qualcomm Atheros' broad home gateway IP portfolio, including Wi-Fi, powerline, small cell, and Ethernet switch technologies, and Ikanos' advanced wired modem technology, is designed to create a complete solution for a wide range of home gateway products to better serve the carrier segment." Broadcom (NASDAQ:BRCM) and Marvell (NASDAQ:MRVL) are among the other companies competing in this space.
    • Qualcomm CEO Steve Mollenkopf suggested last week his company would make new chip acquisitions.
    | Thu, Aug. 6, 9:53 AM | 1 Comment
  • Fri, Jul. 31, 10:44 AM
    • ParkerVision (NASDAQ:PRKR) states a federal appeals court (the CAFC) has affirmed a 2014 district court ruling declaring the company didn't prove Qualcomm (NASDAQ:QCOM) infringed its patents.
    • The court has also "upheld the district court's decision denying Qualcomm's judgement as a matter of law ("JMOL") motion for invalidity with regard to claim 27 of [ParkerVision's] '518 patent but reversed the district court's decision with regard to Qualcomm's JMOL for invalidity on the remaining claims in the case."
    • CEO Jeffrey Parker: "We are highly disappointed with the appellate court's decision both with regard to infringement and validity of certain of our patent claims. Despite this setback, we will consider further options on appeal, and will move forward in our second infringement case against Qualcomm, HTC and Samsung."
    • ParkerVision nosedived prior to the company's official announcement, and was subsequently halted. Shares plunged in May after the CAFC heard oral arguments for ParkerVision's appeal.
    • Update (11:54AM ET): ParkerVision is down 38% after coming off a halt.
    | Fri, Jul. 31, 10:44 AM | 1 Comment
  • Wed, Jul. 22, 4:51 PM
    • Qualcomm's (NASDAQ:QCOM) strategic realignment plan aims to reduce annual spending by $1.4B. In addition to cutting 15% of its workforce, the company plans to lower costs by reducing annual stock compensation grants by $300M.
    • Confirming a recent WSJ report, Qualcomm adds it plans a review of its corporate/financial structure that includes "possible business separation alternatives" - presumably a reference to a potential split of QCT (chips) from QTL (licensing). Further capital returns and "other potential strategic and financial alternatives" will also be weighed. The review is expected to be finished by year's end.
    • As part of a deal with activist Jana Partners, Qualcomm has added two Jana-backed directors, Mark McLaughlin and Tony Vinciquerra, and plans to add another independent director. Donald Cruickshank won't stand for board re-election at the 2016 annual meeting; Raymond Dittamore won't stand at the 2017 meeting.
    • Qualcomm, which has a history of making big investments in non-core ventures (FLO TV, Globalstar, etc.), also says it's "reducing its investments outside of QTL and QCT and will focus these investments around the highest-return opportunities, including data centers, small cells and certain IoE verticals."
    • Guidance: Discussing its light FQ4 guidance (revenue is expected to be down 25%-40% Y/Y), Qualcomm notes chip sales continue to be impacted by "increased concentration in the premium tier" - a reference to iPhone share gains - as well as lower high-end chip sales from "a vertical customer" (presumably Samsung) and lower Chinese sell-through of certain phones containing high-end chips.
    • In addition, royalty revenue continues to be impacted by Chinese under-reporting (in spite of the February settlement). Qualcomm thinks "it will take time" to finish negotiations with certain Chinese OEMs. The company's FY15 (ends in September) forecast for reported 3G/4G device sales has been cut to $253B-$259B from $255B-$275B.
    • MSM shipments: 225M MSM chips were shipped in FQ3, flat Y/Y and towards the high end of a 210M-230M guidance range. However, shipments are expected to fall to 170M-190M (-19%-28% Y/Y) in FQ4.
    • Key numbers: QCT revenue fell 22% Y/Y in FQ3 to $3.85B; op. profit fell 74% to $289M. QTL revenue rose 7% to $1.93B; op. profit rose 7% to $1.65B. $5.4B was spent to buy back 63.7M shares. Qualcomm ended FQ3 with $35.2B in cash/investments, and $10.9B in debt.
    • After initially rising, shares have fallen to $62.75 AH.
    • FQ3 results/FQ4 guidance, PR
    | Wed, Jul. 22, 4:51 PM | 1 Comment
  • Wed, Jul. 22, 4:07 PM
    • Qualcomm (NASDAQ:QCOM): FQ3 EPS of $0.99 beats by $0.04.
    • Revenue of $5.83B (-14.4% Y/Y) misses by $20M.
    • Expects FQ4 revenue of $4.7B-$5.7B and EPS of $0.75-$0.95, below a consensus of $6.13B and $1.08.
    • Cutting 15% of workforce via strategic realignment plan.
    • Shares +1.9% AH.
    • Press Release
    • Update: Qualcomm finished AH trading down 1.3%.
    | Wed, Jul. 22, 4:07 PM | 24 Comments
  • Mon, Jul. 20, 9:50 PM
    • Shortly after The Information reported major layoffs are planned, the WSJ reports Qualcomm (NASDAQ:QCOM) is "expected to conduct a sweeping strategic review that will look at the possibility of a breakup." Board changes are also reportedly being considered.
    • The WSJ adds Qualcomm might announce it's considering a breakup and other options, such as bigger capital returns, when it posts FQ3 results on Wednesday afternoon. It cautions the company's plans are "in flux." Qualcomm has already launched huge buybacks, and even tapped debt markets to help finance them.
    • In April, activist Jana Partners called on Qualcomm to consider spinning off its chip unit (QCT) from its IP licensing unit (QTL). Chairman Paul Jacobs stated in late June the company has no such plans. There's speculation a spun-off QCT would participate more aggressively in the chip industry's M&A wave.
    • Qualcomm finished AH trading up 2.7% to $65.53.
    | Mon, Jul. 20, 9:50 PM | 5 Comments
  • 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.
    | Mon, Jun. 29, 8:23 AM | 4 Comments
  • 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, 6:37 PM | Comment!
  • 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
    | Wed, Apr. 22, 4:07 PM | 2 Comments
  • 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.
    | Mon, Apr. 6, 9:16 AM | 1 Comment
  • Fri, Mar. 27, 11:48 AM
    • After falling 8.3% over the last two days thanks to a major chip stock selloff, Skyworks (NASDAQ:SWKS) is recovering some of its losses in the wake of a $15 Northland Securities target hike to $105. Northland's target was at $80 prior to Skyworks' Jan. 22 FQ1 beat.
    • Meanwhile, Citi and Rosenblatt are dueling over near-term smartphone demand. Citi has respectively cut its 2015 and 2016 smartphone unit growth forecasts to 16% and 13% from 19% and 15.5% due to a belief Chinese/emerging markets demand is softer than expected. "We expect a challenging outlook for smartphone companies with high China exposure." With OEMs typically pricing phones in dollars, a strong dollar is seen hurting sales to "price-sensitive markets" in general.
    • Rosenlatt, by contrast, says supply chain talks suggest little has changed. "We don’t believe that Taiwan Semi‘s and SanDisk’s forecast cuts are related to the overall smartphone industry ... We believe that Samsung is increasing [Chinese] production from 3 million per month in Q1 to 7-8 million per month in Q2. Qualcomm (NASDAQ:QCOM) and MediaTek are also seeing strong orders from China."
    • In addition to Qualcomm/MediaTek, Rosenblatt expects Skyworks, Avago (NASDAQ:AVGO), Synaptics (NASDAQ:SYNA), and Micron (NASDAQ:MU) to benefit from healthy Chinese demand. The firm argued back in December Skyworks and Micron would benefit.
    | Fri, Mar. 27, 11:48 AM | 3 Comments
  • Wed, Mar. 11, 10:36 AM
    • VentureBeat reports Intel's (INTC +3.7%) recently-announced XMM 7360 4G baseband modem (made by its Infineon unit) will go into 2016 iPhone units aimed at emerging markets in Asia and Latin America, thus partly taking a slot reserved for several years by Qualcomm's (QCOM -0.9%) Gobi modems.
    • The site adds Apple (NASDAQ:AAPL) engineers "have been making trips to Munich, Germany to work with Intel engineers to ready the Intel LTE chip for the iPhone," and that Intel "has been willing to go a long way to get its LTE chips into Apple phones." Infineon was once the iPhone's (3G) baseband supplier, before Apple switched to Qualcomm.
    • The XMM 7360 supports Cat-10 LTE (450 Mbps peak download speeds), as well as 3x carrier aggregation. Qualcomm, which still claims the lion's share of the 4G baseband market, announced a Cat-10 LTE modem (the Gobi 9x45) last November that was declared to offer better power consumption and take up less board space than the prior-gen/Cat-6 9x35.
    • Apple sold 193M iPhones last year, and will likely top 200M this year. As is the case with many other clients, Qualcomm's modem sales to Apple help enable the sale of several complementary parts - an RF transceiver, a power management IC, a receive-only chip, and an envelope-tracking IC that lowers power draw.
    • Intel is up sharply today after selling off hard yesterday amid a market rout. The chip giant has already seen 18.2M shares traded vs.a 3-month daily average of 29M.
    | Wed, Mar. 11, 10:36 AM | 22 Comments
  • Mon, Mar. 9, 5:40 PM
    | Mon, Mar. 9, 5:40 PM | 1 Comment
  • Mon, Mar. 9, 4:18 PM
    • Qualcomm (NASDAQ:QCOM) has launched a $15B buyback program that will replace a prior program with $2.1B remaining. The company plans to buy back $10B worth of shares within 12 months, on top of a current commitment to return 75% of free cash flow to shareholders. At current levels, the new buyback is good for repurchasing ~1/8 of all outstanding shares.
    • The quarterly dividend has been hiked by $0.06 (14%) to $0.48/share; that's good for a 2.6% yield at current levels. It will be effective for dividends payable after March 25.
    • Qualcomm spent $1.7B on buybacks in the December quarter (FQ1). With the company ending the quarter with $3.6B left on its buyback authorization, today's announcement suggests it has spent $1.5B on buybacks since.
    • A 20% dividend increase and $5B buyback hike was announced a year ago. Qualcomm plans to raise debt to finance the new capital returns. The company had $31.6B in cash/marketable securities and no debt at the end of FQ1.
    • Shares have risen to $74.21 AH.
    | Mon, Mar. 9, 4:18 PM | 14 Comments
  • Mon, Mar. 2, 11:02 AM
    • Qualcomm (QCOM -0.5%) has used the first day of the Mobile World Congress to share details about the Snapdragon 820, a next-gen flagship processor (the successor to the 810, which is set to begin shipping in commercial hardware) that will begin sampling in 2H15.
    • The 820 makes use of Qualcomm's Zeroth neural networking processor tech, as well as a next-gen ARM CPU core architecture called Kryo (the successor to Qualcomm's Krait); the 810 used off-the-shelf ARM Cortex A-57 cores. Whereas the 810 uses TSMC's 20nm manufacturing process, the 820 will use an unnamed "leading edge FinFET process node" (quite possibly Samsung/Globalfoundries' 14nm process).
    • Among other things, Zeroth is said to enable "computer vision, on-device deep learning and smart cameras that can recognize scenes, objects, and read text and handwriting," always-on "awareness Devices that can anticipate user needs by always being aware of their surroundings," and "dynamic audio that can adapt surround sound based on head movement and facial recognition." Qualcomm is counting on the technology to be differentiator as it squares off against MediaTek, Intel, Nvidia, and (indirectly) Samsung.
    • Qualcomm has also announced Snapdragon Sense, a fingerprint sensor solution that relies on ultrasonic (sound wave-based) fingerprint recognition rather than (like existing mobile solutions) capacitive touch-based recognition. Qualcomm notes ultrasonic recognition allows a sensor to "scan through a smartphone cover that is made of glass, aluminum, stainless steel, sapphire and plastics," and to "scan through various contaminants that might be present on the finger, such as sweat, hand lotion and condensation."
    • Sense is expected to be available in commercial hardware later this year, and is "already in various sampling stages with most major OEMs."
    • Leading mobile fingerprint sensor provider Synaptics (NASDAQ:SYNA) is selling off in response. The decline comes in spite of yesterday's Galaxy S6 reveal and a $10 Cowen target hike (to $105). This morning, Synaptics announced a fingerprint sensor solution for gaming hardware, as well as the availability of its TDDI (integrated touch controller/display driver) offerings for mobile devices.
    • Last week: Qualcomm backs unlicensed 4G spectrum, invests in drone maker
    | Mon, Mar. 2, 11:02 AM | 4 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.
    | Mon, Feb. 9, 11:51 AM | 4 Comments
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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.