Things haven’t been going Apple Inc. (NASDAQ:AAPL)‘s way recently. The company’s stock is down more than 11% since its quarterly earnings came out last month, and the stock has plunged more than 26% over the past six months. But Apple is just one company (albeit a very important one) in the mobile industry. Investors need not look much further than the inside of an Apple iPhone for solid investment ideas in the mobile industry.
The monarch of mobile
If Apple is a representative of the high-end smartphone market, then consider QUALCOMM, Inc. (NASDAQ:QCOM) the ambassador of the entire mobile industry. The company owns thousands of patents for 3G mobile data technologies and collects 3%-5% on every CDMA mobile device sold. Chew on that for a minute if you skimmed over it. Qualcomm brings in cash on every single mobile device that uses its patented 3G technology across the globe — and it doesn’t need to do a dang thing to collect it.
Newer devices are adopting the faster 4G technologies, which Qualcomm has some patents on as well, but the company doesn’t have much to fear when it comes to changing technology. Smartphones will be backward compatible with 3G for about another decade, allowing Qualcomm to receive licensing fees the entire time. That means for the next 10 years of mobile, no matter what new standards come out or new technologies are used, Qualcomm will make money off of those new products just as it does now. The company is expected to see licensing revenue grow by 18% in 2013 — a pretty sweet gig if you can get it.
Qualcomm is much more than a patent play, though. The company makes processors for high-end and low-end smartphones. Some of its latest chips are in the Nokia Corporation (NYSE:NOK) Lumia and the CDMA version of the Samsung Galaxy S III. It also makes mobile station modem — or MSM — chips for Apple, HTC, and others. Between its patents, processors, and MSM chips, Qualcomm is diversified within the mobile industry, and it succeeds with both the sales of Android and iOS smartphones.
Mobile is on the move
Right now, investors are paying about 18 times earnings for a piece of Qualcomm’s mobile diversification, while paying about 10 times earnings for Apple. Qualcomm may seem expensive compared to Apple, but think of the multipronged approach Qualcomm has in mobile. Qualcomm’s mobile diversification positions the company to profit from mobile’s new future — developing countries.