QUALCOMM, Inc. (QCOM): Can This Telecom Giant Continue Dominance in Chipset Sector?

Owing to the favorable trends, namely the growing dominance of smartphones and tablets, Broadcom’s stock has been on the high-end of its 52-week range. Qualcomm holds the competitive edge in cellular baseband chips for mobile phones, but Broadcom responded by shifting to smartphones and the 4G standard to be competitive. To hurt Qualcomm over the Snapdragon, Broadcom is licensing ARM’s ARMv7 and ARMv8 architecture to make a chip that integrates Broadcom’s 4G LTE modems. This enables Broadcom to effectively compete in the LTE market with Qualcomm.

The second notable QUALCOMM, Inc. (NASDAQ:QCOM) competitor is Texas Instruments Incorporated (NASDAQ:TXN). Its OMAP driver competes with Qualcomm’s Snapdragon. It lost customers such as Motorola to Qualcomm, but it has bounced back with the OMAP 4470 processor. Companies such as BlackBerry are using it for its capacity for high performance. Some analysts are eying the $35.71 per share mark for 2014. The company has recorded a slight loss over the last month when compared to Qualcomm. It has a $3.40 per share cash balance and debt of $5.68 billion, compared with Qualcomm’s cash balance of $7.80 per share. Qualcomm, like Texas Instruments has seen a 2% pullback over the last one month. With a gross margin of 61.27%, Qualcomm is more attractive than Texas Instruments (43,63% gross margin). Texas Instruments also has a less impressive cash balance and PE at $3.48 per share and 22.29.

Summary

Relying on its dominant position as a supplier of chips for tablets and smartphones, QUALCOMM, Inc. (NASDAQ:QCOM) has expanded its business services despite the rivalry of Chinese vendors. Its fourth quarter shipment of 3G/4G devices was about 233 to 237 million units, at an estimated average selling price of about $224 to $230 per unit. The stock has remained stable in the past few months. It is trading around the low end of its 52-week range at around $61. So this might be the right time to buy the stock.

The article Can This Telecom Giant Continue Dominance in Chipset Sector? originally appeared on Fool.com and is written by Mark Girland.

Mark Girland has no position in any stocks mentioned. The Motley Fool owns shares of Qualcomm. Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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