This Company Wins the Battle Without Fighting: QUALCOMM, Inc. (QCOM)

Page 1 of 2

QualcommAt this very moment when Apple and Samsung are struggling to expand their market, and get the better of each other, QUALCOMM, Inc. (NASDAQ:QCOM) without much difficulty is emerging victorious. It dominates the mobile chip manufacturer market and has good potential to deliver, for its investors. Let’s see how.

Qualcomm’s current position

Qualcomm Q1 2013 performance was phenomenal. Earnings and revenue both were nearly 30% up compared to last year. Apple uses most of the chips designed by Qualcomm. Though Apple has left investors skeptical about future returns from it, Qualcomm has outperformed. The unparalleled performance by the chip giant is due to its relationships to other tech companies such as Samsung, Nokia and HTC.

The company owns a number of patents that provide it with a steady flow of revenue. This should improve further as licensing revenue is expected to grow 17% in the current year. Qualcomm receives a handsome 5% of the price of handsets on all CDMA-enabled 3G devices and the 3G network is nowhere near its saturation point.

Last year, Qualcomm shipped 86% of the total 47 million LTE-capable chips which shows its supremacy in the LTE market. The company receives around 3.2% of the price of a 4G LTE network enabled device as its revenue. Currently the amount of data traffic through 4G is only 1% of the total traffic but it is expected to grow ten folds in the next five years that should give the company’s top and bottom line a major shift upward.

Moreover, it is sincerely dedicated towards mobile processors and also its processors are found in Nokia Corporation (ADR) (NYSE:NOK)‘s Lumia phones, Research In Motion Ltd (NASDAQ:BBRY) BlackBerry‘s new BB10, Samsung and HTC phones and tablets. Qualcomm’s patents and processors perk up its position to benefit from future growth of 4G mobile and its 3G business still has a lot of potential.

The company has a clean balance sheet with debt of only $60 million and a cash balance of $12 billion. Qualcomm without doubt is trading at a premium with a P/E ratio over 18 times while the industry P/E averages around 15 times. Its premium is well supported as it is operating at a net margin of 32%. Further, its five year annual revenue growth clocks in at 17% and is expected to grow at 25% in 2013.

Let’s game it up

NVIDIA Corporation (NASDAQ:NVDA) has ruled the PC graphics and performance segment of the market and has made tablets, smartphones, and handheld gaming its new focal point. Lately, Qualcomm has benefited from the rumors that its processor will be used in Google’s next version of Nexus 7 tablet rather than NVIDIA’s Tegra 3.

The actual picture still remains unclear, because if Google wants a single source, it can still depend on NVIDIA. NVIDIA’s Tegra 4 is now attuned with 4G LTE resolving the concern that would have been relevant last year, when it had not made its Icera basebands LTE-compatible. Moreover, the report claims that Google is eyeing the standalone APQ8064 chipset rather than LTE-integrated MSM8960, which is a little difficult to believe that it will choose an older Snapdragon above the most recent Tegra.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!