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Qualcomm Inc. (QCOM)

  • 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)
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  • 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
  • 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.
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  • 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.
  • 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.
  • Mon, Mar. 9, 5:40 PM
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  • 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. 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, 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. 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.
  • Thu, Jan. 29, 12:47 PM
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  • Thu, Jan. 29, 9:12 AM
  • 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
  • Wed, Jan. 28, 5:35 PM
  • 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
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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.