QUALCOMM, Inc. (QCOM) Hikes Dividend, Still the Smartest Name in Chips

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Growing where others can’t
Qualcomm’s strong position with Apple and Samsung is an advantage not shared by many rivals. While, Broadcom can make the same claim, management didn’t seem too confident going into this year that it can sustain its recent growth levels. Even though Broadcom’s management guided for 8.2% growth in Q1 revenue, it still suggests 5% sequential decline.

Although Broadcom might have guided under what it can likely deliver, I wouldn’t look beyond management’s words in this case. The company might be able to steal share, but it will be hard given Qualcomm’s already 52% market share in baseband chips. And with QUALCOMM, Inc. (NASDAQ:QCOM) guiding higher, I don’t see where Broadcom has any room.

So with all due respect to Jankowski, what she’s seeing and what managements of both companies see are not in alignment. Even though NVIDIA recently boasted about taking market share at any cost, it won’t come at Qualcomm’s expense.

What of the stock?
I do agree with Jankowski on her $80 price target. These shares have been undervalued for some time and should be acquired by investors who believe in the long-term growth prospects of mobile. While concerns about operating leverage and competitive threats will still come up, Qualcomm has been able to offset these fears with better performance and game-changing innovation. I don’t expect this to change.

The article Qualcomm Hikes Dividend, Still the Smartest Name in Chips originally appeared on Fool.com and is written by Richard Saintvilus

Fool contributor Richard Saintvilus owns shares of Apple. The Motley Fool recommends Apple, Goldman Sachs, Intel, and NVIDIA. The Motley Fool owns shares of Apple, Intel, and Qualcomm.

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