Qualcomm Incorporated QCOM recently announced that it has inked a new five-year, royalty-bearing patent license deal with LG Electronics Inc. (LGE) in the light to develop and sell 3G, 4G and 5G smartphones. The move is in accordance with the chipmaker’s global licensing terms.
The agreement underscores Qualcomm’s established technology relationship and reiterates the value of its superlative patent portfolio. It is the developer of foundational technologies for the wireless industry. The company seeks to make its breakthrough technologies available to leading OEMs like LGE, and to support them in delivering compelling products worldwide.
Qualcomm is known to be one of the largest manufacturers of wireless chipset built on baseband technology. The company 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. It has redefined the computing and mobile ecosystem around the world with the launch of QCA6390 Connectivity system-on-a-chip product.
In April, Qualcomm reached a surprise settlement that cleared the road for iPhones to once again use its modem chips. 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.
However, it faces fierce competition from low-cost rival chipmakers like MediaTek. The Huawei export ban has also led to challenging industry conditions, particularly in China. This will likely create headwinds in the next two fiscal quarters.
For the fourth quarter of fiscal 2019, Qualcomm expects revenues in the range of $4.3-$5.1 billion. Non-GAAP earnings are projected in the 65-75 cents per share range. Revenues from Qualcomm Technology Licensing (QTL) are expected between $1 billion and $1.2 billion. For Qualcomm CDMA Technologies (QCT), the company anticipates Mobile Station Modem (MSM) chip shipments to be in the range of 140 million to 160 million units.
Qualcomm has long-term earnings growth expectation of 12.8%. The stock has rallied 33.7% compared with the industry’s growth of 16% in the year-to-date period.
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 Sonim Technologies, Inc. SONM. While PCTEL sports a Zacks Rank #1 (Strong Buy), Nokia and Sonim carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
PCTEL surpassed earnings estimates thrice in the trailing four quarters, the average positive surprise being 146.4%.
Nokia surpassed earnings estimates thrice in the trailing four quarters, the average positive surprise being 89.3%.
Sonim has long-term earnings growth expectation of 25%.
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