# Qualcomm (QCOM)



## m3s (Apr 3, 2010)

Well, I meant to start a Qualcomm thread a few times already thinking it might be an entry opportunity for others. It just jumped back up 8% this morning after beating estimates. I've held them for years just based on the growth potential of the high-speed mobile data networks.

QCOM earns license revenue from the telcos who use 3G/LTE networks and they also sell the actual chipset that connects mobile devices to those data networks. They design competitive ARM based processors for mobile devices as well, but they don't command key patents here as they do with 3G/LTE tech (Apple and Samsung can freely design their own, but Samsung has used some QCOM processors) They are spending a lot of their revenue grabbing up all kinds of technology patents for smartphones, satellite communication and wifi tech. They have for example the patent for aGPS which you see now in nearly any GPS smartphone. They started out designing satellite tracker devices which are now used around the world and many other innovative forays in tech.

Not knowing what would come of the Apple-vs-Android marketshare battle, I figured QCOM would continue to benefit either way as these data networks spread around the globe. Might be something for your watchlist

Qualcomm Inc. (QCOM), the largest seller of mobile-phone semiconductors, rose in late trading after forecasting sales and profit that exceeded analysts’ estimates, helped by robust consumer demand for smartphones.


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## MoMoney (Apr 1, 2011)

I am long QCOM, i bought on the dip yesterday.

The companies biggest problem over the last 4Qs is "inability to meet demand", a dream compared to the other semiconductor majors which seem to be bleeding market share.


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## protomok (Jul 9, 2012)

Plus, TI recently announced they're officially exiting Mobile:
http://money.cnn.com/2012/11/14/technology/texas-instruments-layoffs/

With OMAP out of the picture I'd expect QCOM to grow even more in SOCs. Handset makers are now pretty much forced to use either QCOM or Nvidia unless they're making their own chips like Apple / Samsung.


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## m3s (Apr 3, 2010)

Thanks for that link. I always considered Nvidia a much bigger threat to their SoC market than TI. The big advantage that Qualcomm has is integrating the LTE or 3G modem into the one chipset, as well as maybe aGPS etc. Intel on the other hand _could_ have an advantage to manufacture their own chips whereas QCOM has had trouble meeting present demands for mobile chips. Intel will probably also end up in that mix competing for the non-Apple/Samsung devices (maybe in 2013... sometime when they come out with a good mobile chip)

The SoC market is mostly icing on the cake though. I like the moat they have with LTE chipsets and royalties


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## protomok (Jul 9, 2012)

Anyone else adding to Qualcomm at these levels? QCOM took a beating over licencing concerns in China...I think the concerns are overrated.

I know everyone keeps talking about a correction but IMHO Qualcomm is quite undervalued at the moment. Here's a couple reasons:
-> Very low P/E. Forward P/E a whopping 13.2, TTM P/E 17.5. Historical P/E's are normally much higher:
2013: 20.3, 2012: 18.6, 2011: 19.8, 2010: 22.8, 2009: 37.2, 2008: 21.8, etc.
-> P/B, P/S, and price-to-cash-flow are all below historical averages for QCOM
-> Awesome dividend...2.29% at the moment.
-> Strong business model. They have SOCs or modems or both in almost all phones and tablets and tons of support and licencing revenue .


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## m3s (Apr 3, 2010)

I'm not adding, but it has already been in my "top 5 holdings" for a few years. Thanks for bumping the thread as I wasn't watching this (on vacation)


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## m3s (Apr 3, 2010)

Down 10% on earnings. Might be a buying opportunity for some

3 preliminary investigations against them I'm not too concerned about. China not paying entire licencing on 3G/LTE is a concern, but nothing new.


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## indexxx (Oct 31, 2011)

m3s said:


> Down 10% on earnings. Might be a buying opportunity for some
> 
> 3 preliminary investigations against them I'm not too concerned about. China not paying entire licencing on 3G/LTE is a concern, but nothing new.


I've been in and out of QCOM for the past couple of years- it's been a pretty good swing trade for me.


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## gibor365 (Apr 1, 2011)

Was thinking to open position.... low forward P/E and payout, raising dividends for 12 years...any opinions?


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## andrewf (Mar 1, 2010)

Qualcomm has no manufacturing capabilities in house, it relies on third party foundries. It seems those third parties are struggling to get to the next process node, to the point where intel might be 2 nodes ahead rather than just 1. Intel may have an opportunity to make some waves in the mobile space, at the expense of firms like qualcomm.


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## gibor365 (Apr 1, 2011)

I like that from anything connected to 3G or 4G networks, QCOM gets a royalty ...


> Qualcomm simply licenses technology, it collects rather large profits from this segment. During its last quarter, Qualcomm created $1.8 billion in revenue from licensing, and $1.6 billion was listed as an operating profit. Hence, Qualcomm's licensing business accounts for well over half of its total profit, with an operating margin of nearly 89%.


...Also Qualcomm vowed last year to return 75% of its free cash flow to shareholders... Looks like issues with China is already priced in....

And we are fine with Intel  as my wife has pretty big INTC position in her account....
I just want to increase a bit our tech positions, so far except INTC , we have AAPL , XLNX and QQQ (also planning to increase this one during 2015)


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## m3s (Apr 3, 2010)

andrewf said:


> Qualcomm has no manufacturing capabilities in house, it relies on third party foundries. It seems those third parties are struggling to get to the next process node, to the point where intel might be 2 nodes ahead rather than just 1. Intel may have an opportunity to make some waves in the mobile space, at the expense of firms like qualcomm.


Steve Jobs claimed to have asked Intel to make the original iPhone chips and practically gave them the blueprints.. and he was very critical of how complacent and ignorant they were in the mobile realm. I guess they were just too big to fail once they actually realized the mobile sector is not child's play. I sold my ARMH awhile ago but still holding QCOM


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## CPA Candidate (Dec 15, 2013)

I've been holding this company for a year, pretty disappointing underperformer. Two big gap downs last year on bag news. If it got to $76-77 I'd happily sell out, too many negative surprises.


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## MrMatt (Dec 21, 2011)

m3s said:


> Steve Jobs claimed to have asked Intel to make the original iPhone chips and practically gave them the blueprints.. and he was very critical of how complacent and ignorant they were in the mobile realm. I guess they were just too big to fail once they actually realized the mobile sector is not child's play. I sold my ARMH awhile ago but still holding QCOM


Intel made a strategic choice to focus primarily on Servers and PC/Laptops. Which is still a large market by revenue, and which they dominate at mouth watering margins. Nobody really comes close.

They're now moving back down into embedded, albeit at the high end (IoT) as opposed to the low end (ie 8051 class). They're also pushing hard into mobile, which they're doing quite well.


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## m3s (Apr 3, 2010)

Beats quarterly expectations, drops 11% on lowered outlook. Might not get their processor in the Galaxy S6


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## CPA Candidate (Dec 15, 2013)

I'm looking to sell this turd if it can get back to $70. Three consecutive gap downs on earnings. 

I bought into the sentiment that it would be better to buy the chip manufacturer than the smartphone manufactures (Apple) and it has turned out to be totally wrong. Apple is crushing, QCOM is losing business and struggling in China. The only thing they really have going for them is balance sheet strength and cash. Annual EPS growth rate is sub 10%.


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## m3s (Apr 3, 2010)

Trump killed the Broadcom takeover - Might present a buying opportunity for some

Quite the roller-coaster but they pay a decent dividend now


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## olivaw (Nov 21, 2010)

I hold INTC so Trump's decision to kill the Broadcom takeover of QCOM bumped my share price a little. Together, Broadcom and Qualcomm would have posed a significant threat to INTC. 

My plan was to sell INTC a couple of years ago after it became clear that INTC was lost the mobile battles. I never got round to it so stumbled backwards into a decent return.


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## m3s (Apr 3, 2010)

From my understanding QCOM dominated 4G and leads in 5G development, however INTC is pouring massive resources to gain market share

Most people don't realize and it's kind of irrelevant, but current iPhone's use both INTC and QCOM modems with INTC variants tested to be inferior. The only way to know is by searching the model number. Canada got the INTC chips but I picked up a QCOM variant elsewhere and it works here. Apple seems to be migrating to INTC modems because of legal disputes with QCOM

5G market will increase anyways with the internet of things so there's room for both. It's not just about phones.. market growth potential for internet of things on 5G is staggering


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## olivaw (Nov 21, 2010)

Only slightly OT .... on the heels of the Trump administrations decision to block the Broadcom takeover of Qualcomm, the rumour mill is saying that Intel may make a bid for Broadcom.


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## m3s (Apr 3, 2010)

Up over 23% today as QCOM and AAPL agree to settle litigation!

I've done well hopping on and off this one over the years and I considered selling last week before this battle started

Holding for now as 5G gets implemented. Doesn't sound like they will dominate 5G as much as 4G


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## james4beach (Nov 15, 2012)

m3s said:


> Up over 23% today as QCOM and AAPL agree to settle litigation!
> 
> I've done well hopping on and off this one over the years and I considered selling last week before this battle started


You were still long? Congrats!


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## m3s (Apr 3, 2010)

Bought back in Jan, same price I first bought it in 2011..

Intel chips compared poorly (some iPhones models sold with both) Apple has been testing both and will go back to Qcom. The legal bs was holding back US tech

The alternative was Huawei


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