QUALCOMM, Inc. (QCOM): Where Do You Go From Up?

That being said, SAMSUNG ELECT LTD(F) (OTCMKTS:SSNLF) (and every other smartphone vendor whose name isn’t Apple Inc. (NASDAQ:AAPL)) tends to go with the best chip for the job. If QUALCOMM, Inc. (NASDAQ:QCOM) can continue to outgun SAMSUNG ELECT LTD(F) (OTCMKTS:SSNLF)’s own internal chip teams (which are actually going to be stepping up their game with a custom ARM Holdings plc (ADR) (NASDAQ:ARMH)-compatible core that allows for more control over the performance/power characteristics of the chip over standard ARM cores), then it will probably keep those key spots, but if it can’t, then that could have a materially negative impact on the company’s financial performance.

It’s not all bad, though
Quite frankly, I’m not making a particularly bearish call on QUALCOMM, Inc. (NASDAQ:QCOM). It’s not particularly expensive and its cellular patent royalty base is secure, although a shift to 4G-only networks would have a negative impact on royalty rates (Qualcomm gets about 5% for each 3G device sold, whereas it only gets about 3.25% for each 4G device sold). However, what I do worry about is that there’s just not a lot of upside left and that the risk/reward of holding or buying shares at these levels is simply not attractive. Perhaps on a pullback, the risk/reward looks more favorable, but for now I have to stay on the sidelines.

The article Qualcomm’s a Great Company, but Not a Great Buy originally appeared on Fool.com.

Ashraf Eassa owns shares of Intel, NVIDIA, and Broadcom. The Motley Fool recommends Apple, Intel, and NVIDIA. The Motley Fool owns shares of Apple, Intel, and Qualcomm. 

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