I don't care who gives me a thumbs down and I don't care to hear what Wally says. Somebody give me one good reason why Qualcom would do this if they were about to implode as some here suggest since it's an ARM user.
QCOM gets a large chunk of its revenue and profits independent of ARM and TSMC. QCOM gets licensing fees for its modem patents. On PAGE 35 of the 10K, QCOM got $6.6b licensing revenue of $19.1b for 2012. Think about the costs attributed to these patents and the margins of ARM Holdings.
Compare the $6.6b of 2012 licensing with the 2012 QCOM operating income of $5.7b.
Notice that the TOTAL 2012 QCOM INCOME was less than their licensing revenues. Same for 2011 and 2010.
From QCOM SEC 10k. PAGE 2
"Our Licensing Business. Our patent portfolio includes certain patent rights essential to and/or useful in the manufacture and sale of certain wireless products. We grant licenses to use portions of our intellectual property portfolio to manufacturers of wireless pro ducts, such as mobile devices, also known as subscriber units, which include handsets, other consumer devices (e.g., tablets, personal computers, e-readers), machine-to-machine devices (e.g., telematics devices, meter reading devices) and data modem cards, the infrastructure equipment required to establish and operate a network, and equipment to test networks and subscriber units. In partial consideration for such licenses, we collect fixed license fees (payable in one or more installments) and ongoing royalties on products sold by our licensees that incorporate our patented technologies. "
Their new dividend of 35 cents x 1.72b shares = 0.6b per quarter = $2.4b per year
QCOM is devoting about 36% of their 2012 licensing revenue to dividend payments which is the same range that Intel is paying. QCOM is probably as confident in their future as Intel is theirs.
Money can't buy you love (fab) - do you think QCOM and Apple would have made a different decision 10 years ago? you BET
Aug 29, 2012 – LONDON – Apple and Qualcomm have each offered more than a $1 billion to foundry Taiwan Semiconductor Manufacturing Co. to obtain a ...
Gee, let's see if we can think of any other interpretations for Qualcomm raising its dividend by 40 percent:
1.) They can't think of anyone to buy with the cash that would grow earnings.
2.) They can't spend it on fabrication - TSMC won't dedicate space to them and Intel won't touch them.
3.) They are so far behind Intel that it's useless to spend it on R&D.
4.) Declaring a big dividend is so much easier than thinking outside the box.
5.) The board and top executives have a lot of stock and would like to increase their compensation.
In short the best reason for a big increase in dividends is that you simply can't figure out how to use it to grow profits. Not what I'd want from a company I own...