Nalini Muppala

Analysis, observations, perspectives on mobile space

Is Qualcomm in iPhone?

with one comment

Apple is expected to release a CDMA version of iPhone this summer. It will be a safe to bet that Qualcomm figures prominently in a CDMA iPhone. It will be the end of a long wait for Qualcomm.

Will Qualcomm provide just the baseband or will it have a much larger presence with a Snapdragon processor? We will have to wait for the phone to be out and teardown experts to get to work.

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Written by Nalini Kumar Muppala

March 30, 2010 at 9:19 pm

Posted in Apple, Qualcomm

Tagged with , ,

One Response

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  1. YES!

    QCOM Update
    Jump to Comments
    QCOM Update – When we first recommended QCOM at $39 on 2/2/2010, we thought the shares were a steal. Since the shares have fallen 16%. To reaffirm our buy thesis will attempt to uncover why the shares have underperformed, and why we believe they will outperform in the future.

    Why Underperformance? (I) ASPs under pressure, they have been selling more of their lower priced chips as the uptake to 3G and beyond has been slower then expected in the Emerging Markets. Management believes this to be a temporary phenomenon and I believe their assessment to be true. In addition, when this trend reverses (I expect this to occur in the 2H 2010), their top and bottom line should accelerate at a fast rate then estimate by both the street and our numbers at prudentstockinvesting. (II) A inconsistent message from management. I recently spoke to a growth manager that sold the shares. Their gripe was with management and more specifically, a positive preannounce, that result in a selloff after negative to inline forward guidance. Or as they put it, why get everyone excited that things are turning around when they really are not? For the most part, there is no defense here. Management has been wrong, but their ability to historically fend of competitors using the same playbook they are today gives me comfort.

    Why Outperformance in the Future? First I must address a recent announcement,
    On 6/14/2010 QCOM agreed to pay $1.045 billion to acquire wireless broadband spectrum in 4 regions in India. As per management, this was done to manage 4G network deployment in India. The deal put some of QCOM large cash position to work and should set them up nicely to reap the benefits from 4G chip sales and higher royalty rates via the adoption of smart phones.

    Despite this acquisition I am leaving my esp. estimates unchanged and reaffirming my buy rating on the stock ($2.30 in 10’, $2.58 in 11’ & $2.90 in 12’) because (I) nothing has change with in the QCOM’s competitive landscape, (II) there are a number of Snapdragon phones coming to market (their high end chipset) & (III) a pick up in EM adoption to 3G and high margin Smartphone’s.

    Finally, on a valuation basis the shares are a steal, trading at 9.9X 2011 & 8.84X 2012 my eps estimates base on today’s close of $32.65 and subtracting $7 in cash per share.

    http://www.prudentstockinvesting.wordpress.com

    nym5590

    July 10, 2010 at 4:50 pm


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