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Qualcomm Buys Remaining Ownership Stake in RF360 Holdings

Zacks Equity Research

Qualcomm Incorporated QCOM recently announced that it has completed the acquisition of the remaining interest in RF360 Holdings Singapore Pte. Ltd. — a joint venture with TDK Corporation.

Qualcomm is known to be one of the largest manufacturers of wireless chipset built on baseband technology. It has been trying to retain its leadership in 5G, chipset market and mobile connectivity with several technological feats and state-of-the-art product launches.

Per the announcement, TDK Electronics’ remaining interest in the joint venture was valued at $1.15 billion in August 2019. Markedly, the joint venture has produced RF front-end (RFFE) filters, which allow the chipmaker to deliver 4G/5G RFFE solutions. The total purchase price is about $3.1 billion, which includes initial investment, payments to TDK based on sales by the joint venture and development obligations.

With this buyout, Qualcomm Technologies, Inc. (Qualcomm’s wholly-owned subsidiary) will be able to provide customers with its Snapdragon 5G Modem-RF System, including 5G NR sub-6 and mmWave solutions, multiplexers, and antenna tuning. Qualcomm Technologies now has one of the broadest portfolios of RFFE products, comprising integrated and discrete micro-acoustic components utilizing RFFE filter technologies.

Moreover, Qualcomm’s second generation RFFE solutions will allow OEM customers to design thin, high-performance, battery-efficient 5G multimode devices at scale. The company is poised to benefit from the strong adoption of its Snapdragon 5G Modem-RF Systems in more than 150 5G design wins.

The company continues to execute its strategic objectives, including driving the global transition to 5G, protecting the value of its technology, and expanding into new industries and product categories for future growth.

Qualcomm has long-term earnings growth expectation of 12.8%. The stock has added 37.1% compared with the industry’s growth of 16.8% in the year-to-date period. It beat earnings estimates in each of the trailing four quarters, the average surprise being 9.8%.

Zacks Rank & Stocks to Consider

Qualcomm currently has a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the industry include PCTEL, Inc. PCTI, Nokia Corp. NOK and Viasat, Inc. VSAT. While PCTEL sports a Zacks Rank #1 (Strong Buy), Nokia and Viasat carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PCTEL surpassed earnings estimates in each of the trailing four quarters, the average surprise being 110.4%.

Nokia surpassed earnings estimates thrice in the trailing four quarters, the average positive surprise being 89.3%.

Viasat surpassed earnings estimates in each of the trailing four quarters, the average surprise being 59.4%.

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