|Bid||75.34 x 1300|
|Ask||75.35 x 1300|
|Day's Range||74.79 - 75.90|
|52 Week Range||49.10 - 90.34|
|Beta (3Y Monthly)||1.64|
|PE Ratio (TTM)||39.74|
|Earnings Date||Jul 31, 2019|
|Forward Dividend & Yield||2.48 (3.36%)|
|1y Target Est||87.55|
Qualcomm is shaking up its once-a-year approach to updating its flagshipmobile processor, and it could be good news for Android phone fans who craveraw performance
The Trump administration may start approving certain U.S. companies to sell their products to China's Huawei Technologies Co. in as soon as two weeks, Reuters reported Sunday. U.S. chipmakers, including Qualcomm Inc. , Intel Corp. and Micron Technology Inc. , have reportedly pushed to resume sales to the Chinese tech giant, which bought about $11 billion worth of U.S. components in 2018. The U.S. banned most sales to Huawei in May, but Commerce Secretary Wilbur Ross has recently said sales licenses will be issued in cases where there is no national security risk. Reuters reported licenses will likely be issued on a case-by-case basis, starting in the next two to four weeks.
Heavy buyback action has contributed to outperformance by tech stocks in 2019, but the cash available for future share repurchases is running low.
Collaboration between tech firms is likely to serve as a major landmark in the 5G history of the country, and sow the seeds for delivering the state-of-the-art technology beyond urban areas.
As investors ponder what to do with Qualcomm (QCOM) stock, many are looking to the courts.So far in 2019, the chip giant’s stock has largely been moved by events stemming from legal victories or losses. A major win came when the company and Apple entered into an agreement that took care of licensing issues between the two, as well as set the path for Qualcomm to provide 5G technology for the iPhone. But a recent loss came when an antitrust judge ruled against the company, saying it must change its practices — as a result, its stock price has taken a beating. Qualcomm is looking to appeal the ruling, and recently had a stay request denied.Is now the time to buy Qualcomm stock? Deutsche Bank analyst Ross Seymore recommends investors to stay sidelined, as he maintains a Hold rating on QCOM stock with $80 price target.As always, we like to give credit where credit is due. According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, Seymore has a yearly average return of 26.4% and an 82% success rate. Seymore is ranked 28 out of 5,234 analysts.The ruling against Qualcomm provides a major challenge to the company’s licensing abilities. Judge Lucy Koh sided with the FTC, saying “Qualcomm’s licensing practices have strangled competition…” bringing harm to rivals and consumers. Qualcomm is appealing the ruling, but the judge said it must change its business practices, including renegotiating licensing agreements.The company’s recent stay motion was denied by the US Court of Appeals, but Seymore says the filing shows that the company has already seen “an impact on licensing negotiations.” While the analyst is not surprised that Qualcomm took these steps, he says it “sheds new light on how the District Court's decision is beginning to impact current licensing negotiations.”Overall, Seymore sees “questions remaining as to how the five remedies ordered in the FTC vs. QCOM (Koh) ruling will impact Qualcomm's QCT and QTL businesses, especially in the near to medium term ahead of decisions by the Ninth Circuit.” The analyst wants clarity on this during the earnings call later this month but believes the “likelihood of litigation expenses [will remain] elevated for the foreseeable future,” as the company continues to battle in court.All in all, even as the courts aren’t holding it in favor right now, Qualcomm is in good standing with investors. TipRanks analysis of 24 analyst ratings shows a consensus Moderate Buy rating, with 14 analysts saying Buy, nine suggesting Hold and one recommending Sell. The average price target on the stock stands at $85.29, which implies nearly 14% upside above current levels. (See QCOM's price targets and analyst ratings on TipRanks) More recent articles from Smarter Analyst: * Can You Still Trust CannTrust (CTST) Stock? This Analyst Is No Longer Certain That You Can * Tesla (TSLA): Range Anxiety Is All Perception, but Still a Major Hurdle * Cannabis Stock HEXO to Benefit from Sector Chaos * Three Big Reveals as Jefferies Meets With Canopy Growth’s (CGC) New CFO
SAN DIEGO, July 11, 2019 /PRNewswire/ -- Lytx®, a leading global provider of video telematics, analytics, productivity and safety solutions for commercial and public sector fleets, today announced the company has been accepted to participate in the Qualcomm® Smart Cities Accelerator Program. Qualcomm Technologies, Inc., a subsidiary of Qualcomm Inc. (QCOM) launched the accelerator program to help connect cities, municipalities, government agencies and enterprises with an ecosystem of providers offering Qualcomm Technologies' technology-based solutions tailored for smart cities applications.
While Qualcomm (QCOM) will have the freedom to adopt a range of technologies for Internet-connected cars, AT&T (T) will mark the debut of streaming service with HBO Max in spring 2020.
Without question, Qualcomm (NASDAQ:QCOM) is one of the best performers so far this year. Since January's opening price, QCOM stock has skyrocketed 39%. And just as well, Qualcomm's rise in the markets reflects broader positive sentiment toward semiconductors. For instance, the sector-related exchange-traded fund iShares PHLX Semiconductor ETF (NASDAQ:SOXX) is up 30% year-to-date.But despite this good news, potential troubles are looming over the horizon. Last week and just before the Independence Day holiday, a federal judge ruled against Qualcomm in a paradigm-altering antitrust case. The semiconductor giant immediately appealed, but the process may take a more than a year to complete. Since the unfavorable ruling, Qualcomm stock has remained range bound.InvestorPlace - Stock Market News, Stock Advice & Trading TipsComplicating matters for QCOM is both rival and client Apple (NASDAQ:AAPL). For the consumer tech giant, many view these legal proceedings as a comeuppance. And under ordinary circumstances, Apple may have a case. Certainly, the Federal Trade Commission agrees with them. But in the time of Trump and the ongoing U.S.-China trade war, nothing is ordinary. Thus, it's difficult to make pronouncements on QCOM stock. * 7 Retail Stocks to Buy That Are Down in 2019 Why the difficulty? Primarily, antitrust concerns have expanded from being merely business matters into geopolitical ones. That is, penalizing QCOM for anticompetitive actions may benefit free markets, but at the expense of U.S. technological dominance. Not bringing this context into the mix ignores a critical component in assessing Qualcomm stock. Apple Has a Point about QCOM StockBefore we dive in, we should understand how QCOM stock got embroiled in a massive legal battle. For a detailed analysis, I highly recommend InvestorPlace contributor Vince Martin's longform breakdown. To summarize, Qualcomm has an extensive history of running afoul of international antitrust laws.By default, this shores up Apple's case because the facts demonstrate this isn't Qualcomm's first rodeo. Subsequently, Qualcomm stock looks shaky. To Martin's point, it's an element that prospective buyers shouldn't ignore.At the heart of Qualcomm versus Apple debate is the former's patent and licensing businesses. As a premium semiconductor provider, consumer tech firms like smartphone manufacturers highly value Qualcomm's critical chipsets. With the introduction of the 5G network, QCOM has even greater power due to its leadership in this next-generation market.Naturally, Qualcomm runs a very lucrative business licensing its core technologies. This revenue stream underlined the huge growth in QCOM stock over the years. However, Apple contends that Qualcomm is not playing fair with its double dipping.What exactly does that mean? In short, Apple claims that Qualcomm charges royalties on innovations that have nothing to do with the semiconductor firm. Essentially, QCOM is benefiting from two revenue streams from the same source: one for the initial license, and a second for royalties based on a company's own innovations using the original licensed technology. It's a nifty arrangement for Qualcomm stock.Moreover, the chipmaker gets away with it because if its clients won't play ball, Qualcomm won't provide the chips. If QCOM was a discount-bin organization, no one would care. But they own the best 5G technologies; therefore, this practice amounts to a monopoly.And if that monopoly goes away, QCOM stock is in big trouble. China Might "Rescue" Qualcomm StockBut before you hit the sell button on QCOM stock, you should know that the Qualcomm narrative has two components: one between Qualcomm and Apple, and the other between the U.S. and China.As a capitalistic organization, I expect Apple to raise hell: that's what they should do for their organization, their employees, and their shareholders. If I held stake in the company, I'd be disappointed if they didn't.But you must understand - as I alluded earlier - that antitrust accusations have absorbed geopolitical overtones. While I understand the FTC's point, and even the federal judge who ruled against Qualcomm, they're merely job-doers. What I mean is that they're assessing Qualcomm from the perspective of antitrust violations.Is QCOM guilty here? I'm not a legal expert, but they might be. However, that's not what truly hurts Qualcomm stock.Instead, Qualcomm is vital to our national security and our interests moving forward. As The Wall Street Journal's John D. McKinnon pointed out, Qualcomm has used the national security argument before. And it's no small matter. When the FTC first challenged the company's patent-royalty business, representatives from the defense and energy departments sat down with the regulatory agency.Obviously, the meetings didn't convince the FTC to drop its case against Qualcomm. However, the fact that the Department of Defense took an interest in this case tells you something.And that something is that China is lurking in the corner. More critically, they have no qualms about playing dirty to advance their nationalistic agenda. In addition, China's flagship companies like Huawei or Alibaba (NYSE:BABA) received unquestioned support from their government. * 10 Best Stocks for 2019: A Volatile First Half Here in the U.S.? We're about to prosecute one of our best and brightest. This terrible optic just might convince legal authorities to reverse course. Do the Ends Justify the Means?Without exaggeration or hyperbole, when you're dealing with QCOM stock, you're facing a philosophical question: do the ends justify the means?I may attract some heat for this opinion, but I think they do. Frankly, I don't understand what the point of upholding moral principles when our adversaries routinely break them. Due to this high-level trolling, at some point, China will beat us.And not only that, the FTC and other regulatory agencies are playing into China's hands. Again, China doesn't prosecute its companies for international trade and commerce infractions; the country encourages it!On a similar note, this is the reason why I think efforts to stymie big tech firms like Facebook (NASDAQ:FB) is naive. What most people I'd argue fail to realize is that we're in the middle of a tech cold war. While Apple has some grievances, let me be blunt: I'd rather America win this critical war and let Apple lose its battle with Qualcomm than the other way around.But will the ultimate arbiters see it this way? I just don't know. But I think the case is strong enough - again, please reference the DOD meeting with the FTC -- that investors shouldn't panic on QCOM stock.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy on College Students' Radars * 7 Retail Stocks to Buy for the Second Half of 2019 * The S&P 500's 5 Best Highest-Yielding Dividend Stocks The post For Qualcomm Stock Investors, the Legal Battle is Much Bigger than Apple appeared first on InvestorPlace.
Price action and evolving tech needs have long left investors wondering what to do about Intel (NASDAQ:INTC). Since early June, Intel stock has moved higher by about 10%.Source: Shutterstock However, INTC stock has remained range-bound for almost two years. Changing technology has arguably made Nvidia (NASDAQ:NVDA) a more critical chip company than Intel. Also, AMD (NASDAQ:AMD), who consistently lagged Intel during the PC era, has taken a technical lead in many respects.Still, despite this stagnation, its long-term outlook may improve dramatically. While I expect little near-term growth in Intel stock, a technological shift could send INTC much higher over the next few years.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Best ETFs for 2019: The Race for 1 Intensifies A Closer Look at Intel StockThe price-to-earnings (PE) ratio serves as an important indicator in the semi industry. In its heyday during the PC era, Intel commanded PE ratios in the 30s and 40s. Instead, competitors such as AMD and Nvidia now command comparable multiples.Today, with Intel falling behind peers, it currently trades at a multiple of about 10.8. Investors should note that both Nvidia and AMD fell to similar PE ratios a few years ago when their prospects dimmed.From this industry pattern of multiple expansion and contraction, we can surmise that Intel stock is a buy, eventually. This despite a pattern of range-bound trading going back to 2017. The Intel stock price now stands at just under $48 per share.Does that mean that the comeback in Intel stock will begin soon? Not so fast. Those who buy now merely because of the low PE ratio will likely see their patience tested. As our own Laura Hoy stated, Intel likely faces a "bumpy road" ahead.Right now, recent headlines bode poorly for Intel. Read about Intel's technology, and you will hear about slowing data center sales and AMD's faster processors.To my colleague Will Ashworth's point, you may also hear about Microsoft (NASDAQ:MSFT) possibly sourcing processors from AMD or Qualcomm (NASDAQ:QCOM) instead of Intel for the Microsoft Surface. What INTC needsLike its peers in recent years, Intel stock needs a catalyst to inspire buying. For Nvidia, it meant applying its graphics processing units (GPU) to artificial intelligence (AI), virtual reality (VR), and self-driving cars. Likewise, AMD built its comeback on becoming the other GPU company and taking a technical lead on Intel.Seeing comparable action in Intel stock may amount to waiting on two technologies to see widespread adoption, 5G and self-driving cars. As I stated in my previous article, Project Athena will bring the next-generation, 5G compatible products to the market.Moreover, Mobileye has begun testing self-driving taxis. It also signed a contract to bring its technology to 8 million vehicles earlier in the year.Once these innovations hit the market, I think that can drive the long-awaited move into Intel stock. If investors begin to believe in Intel again, I think the PE ratio (now at about 10.8) will reach levels comparable to the ones currently seen in both AMD and Nvidia.NVDA now trades at just under 30 times earnings. Hence, simply taking INTC stock to a comparable valuation would roughly triple the value of INTC. The Bottom Line on Intel stockIntel stock may struggle for some time to come, but a change in technology could send it much higher long term. INTC stock has risen over the last few weeks. However, slowing data center sales and losing its technical lead over AMD could hurt INTC in the coming months.Intel has developed products for both 5G and autonomous vehicles. Hence, after a technological shift occurs, the outlook may become much brighter. Investors will need to wait for both to see more widespread adoption to see if this theory plays out.Still, a return to prominence for Intel would unlock tremendous value. Intel stock currently supports a market cap of about $211 billion. A PE ratio of 30 takes that to about $600 billion.A multiple of 50 would bring the market cap to the $1 trillion mark. Although I do not predict such a valuation, this also shows that Intel is closer than many think to again becoming a top company in tech. With a little patience, investors can benefit tremendously from such a move.As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Sell for an Economic Slowdown * 7 Marijuana Penny Stocks That I May Buy * 7 of The Best Schwab ETFs for Low Fees The post Intel Stock Needs This One Thing to Return to Prominence appeared first on InvestorPlace.
In recent months, the “Tech Cold War” has reared its head, but Apple doesn’t seem ready to throw in the towel in the Chinese market.
The chipmaker said it paused the bidding process to enter into an exclusive negotiating agreement with a single, unnamed bidder.
Qualcomm (NASDAQ:QCOM) stock continues to be volatile. Since mid-April, QCOM stock has moved from $55 to $88, to $65 to $70, before settling in at a current price above $76. But while the recent shifts are larger than usual, QCOM stock has seen big moves for several years now.For the last five years, Qualcomm stock has mostly moved sideways -- the stock was actually down 6% over that period -- but with a number of peaks and valleys along the way. QCOM stock has been a trader's darling for two key reasons.First, Qualcomm is a leader in chips used for smartphones. Key customer Apple (NASDAQ:AAPL) has seen its stock significantly outperform QCOM. But it, too, has seen a few sharp moves. Investor attitudes toward Apple have risen and fallen along with the company's product cycle -- and QCOM in some cases has gone along for the ride.InvestorPlace - Stock Market News, Stock Advice & Trading TipsSecond, Qualcomm's business model has been under various forms of attack for most of that period. And it has been the effectiveness of those attacks, and the threat of new ones, that has driven investors in and out of Qualcomm stock. * 7 Retail Stocks to Buy That Are Down in 2019 That hasn't changed in 2019. If anything, the debate over Qualcomm's model has intensified. Understanding that debate is essential to understanding QCOM stock. Antitrust Concerns Are Nothing NewRegulators have had their eyes on Qualcomm for years. The European Commission, driven by complaints from Ericsson (NASDAQ:ERIC), Nokia (NYSE:NOK), and others, began its initial antitrust probe back in 2005. The investigation was eventually canceled in 2009 after the complaints were withdrawn.One reason those complaints were withdrawn, however, was that the suppliers managed a win in South Korea. In 2009, South Korea's Fair Trade Commission fined Qualcomm $207 million (the figure was reduced by about 18% this year) for unfairly using its dominance in mobile phone chips. With customers moving on to new chips, the changes driven by South Korea's action and the resources used in Europe led the claimants to move on.Regulators in Asia and Europe weren't finished, however. In 2015, Qualcomm paid $975 million to settle antitrust litigation in China -- the largest fine in that country's history. The next year, South Korea hit the company again, this time for $853 million.A new investigation in Europe ended with a $1.2 billion levy in 2018. Another fine reportedly is on the way. Taiwan got $774 million last year as well. All told, Qualcomm has paid nearly $4 billion in antitrust fines worldwide. What Regulators Are Saying About QCOMThe fine print of the allegations vary modestly from country-to-country, but the basic complaint is the same: Qualcomm is using its patent power to cement its monopoly. As EU Commissioner Margrethe Vestager put it last year:"Qualcomm illegally shut out rivals from the market for LTE baseband chipsets over five years, thereby cementing its market dominance. Qualcomm paid billions of dollars to a key customer, Apple, so that it would not buy from rivals."The problem in regulators' view is that Qualcomm charges for its chips -- but it also charges to license the associated patents. It then provides rebates that are conditioned on exclusively buying Qualcomm products. Regulators argue that those rebates, in particular, keep potential rivals -- among them Intel (NASDAQ:INTC) -- out of the mobile baseband chip market.The problem for Qualcomm here is twofold: First, it risks more fines in new jurisdictions. Second, this system is quite profitable for Qualcomm. As Apple has termed it, Qualcomm is "double dipping" in gaining both product and licensing revenue. Losing that ability would hurt Qualcomm revenue and profits.Most notably, the company's licensing revenue is extremely high-margin. In fiscal 2017, pre-tax profit margins (not gross margins -- operating margins, essentially) in the licensing business were 80%. Every dollar of licensing revenue lost suggests, even after taxes, close to 70 cents of lost net income. It's not a surprise, then, that investors showed caution toward Qualcomm stock as antitrust questions piled up. Apple Takes on QualcommWhat really got investor attention, however, wasn't a regulator, but a customer. Apple sued Qualcomm for $1 billion in early 2017, kicking off a bruising legal battle. QCOM stock dropped 12% on the news, as Apple accused the company of inflating royalties. Qualcomm countersued. Apple instructed contract manufacturers like Foxconn Technology (OTCMKTS:FXCOF) to withhold royalties, which hammered Qualcomm profits.Qualcomm stock would hit a 20-month low later in 2017. A takeover attempt by Broadcom (NASDAQ:AVGO) spiked the stock -- but in March 2018, President Donald Trump quashed the deal, and QCOM stock hit the lows again. Another rally would fade along with a sell-off in semiconductor stocks. By February of this year, QCOM was back below $50.Apple's efforts hurt Qualcomm earnings and putting pressure on QCOM shares. Then, out of nowhere, Apple settled. The risk of a loss in that case -- which could color antitrust sentiment worldwide -- came off the table. Billions of dollars in back payments were set to flow into Qualcomm's coffers.QCOM stock gained 23% on the first day and kept rising. It would barely clear $90 in May, if briefly. At that point, Qualcomm stock had risen almost 60% in just a couple of weeks. Over that span, Qualcomm added nearly $40 billion in market value.It appeared as if the worst was over. Antitrust issues overseas had been largely settled. Apple (including its contract manufacturers) and Samsung combined generated 40% of revenue in fiscal 2016 -- and Qualcomm was apparently on good terms with both key customers. 5G was on the way. The naysayers had been proven wrong. After years of volatile and sideways trading, Qualcomm was set to jump-start growth. The U.S. Gets Involved With QCOM AntitrustA lot of news surrounded Qualcomm from 2017 to 2018. There were antitrust fines in Taiwan and Europe. Broadcom was trying to buy Qualcomm, while Qualcomm was trying to buy NXP Semiconductors (NASDAQ:NXPI) in a deal that eventually broke after some 20 months of effort. The Qualcomm-Apple battle garnered headlines. And there were the arguments about the fate of smartphone unit growth -- a key source of pressure on Apple stock -- and the timing and size of the opportunity in 5G.Amid all that action, investors somewhat forgot that the U.S. Federal Trade Commission (FTC) had decided to get in on the antitrust action. The FTC charged Qualcomm with anticompetitive behavior in January 2017. Two days later, the Apple suit was filed. Headlines surrounding that battle somewhat displaced the FTC effort.And as the case dragged on, its relevance seemed minimal. Qualcomm stock had not been very impacted by past antitrust settlements; even a U.S. effort would be much the same. Settlement talks were held last October, suggesting the pending removal of yet another headwind to QCOM stock.That analysis turned out to be wrong, however. QCOM stock had one more big move in it. A Monopoly Ruling, and QCOM Stock TumblesOn May 21, U.S. District Court Judge Lucy Koh ruled in favor of the FTC. Qualcomm stock already had been struggling amid the Huawei blacklist and generally weak sentiment toward semiconductor stocks. It would fall 11% in trading the day after Koh's ruling.Koh found that Qualcomm's "no license, no chips" policy was anti-competitive. The judge cited three reasons:First, Qualcomm refused to allow rivals licenses to standard-essential patents (SEPs). That meant that end customers like Apple or Samsung had to license those patents from Qualcomm even if they used chips from another customer.Second, the rates it charged for those SEPs were "unreasonably high," as the judge wrote in her opinion. On occasion, Koh wrote, Qualcomm charged higher licensing fees when manufacturers used other chips -- in a clear effort to prevent those customers from doing so.Third, the rebates and market share discounts offered by Qualcomm further harmed competition, allowing Qualcomm to use its existing market share to prevent competitors from entering.Koh clearly had the famous Microsoft (NASDAQ:MSFT) antitrust case in mind; she cites that case liberally in her decision. From a broad standpoint, her argument is much the same: Smartphone manufacturers need Qualcomm modems just like PC manufacturers needed the Microsoft operating system. And, like Microsoft in the 1990s, Qualcomm has capitalized on that need to generate more revenue than it would have otherwise -- and to keep its competitors from having a piece of the market. The Importance of SEPs and FRANDParticularly in the context of Apple settling with Qualcomm, Koh's argument appears quite thin at first glance. As the patent holder, isn't Qualcomm entitled to monetize the IP which it spent -- and still spends -- billions of dollars developing? Why, exactly, can the government decide what licensing rates are "unreasonably high"?It's because of the importance of SEPs. The standards created in tech industries, in particular, generally are set by standard-setting organizations, or SSOs. These efforts are hugely important to ensure that an iPhone can call a Samsung, and vice versa. Without agreed-upon industry standards, interoperability would be significantly hampered -- causing harm to consumers and businesses alike.As Koh notes on page 125 of her decision, the Microsoft case is instructive. The Ninth Circuit held that "SSOs requir[e] members who hold IP rights in standard-essential patents to agree to license those patents to all comers on [FRAND] terms (emphasis in original)."As part of those SSOs, Qualcomm agreed to abide by those rules. It can't charge whatever it wants for licensing. It can't coerce or entice customers to exclusively use its chips. FRAND (fair, reasonable, and non-discriminatory) pricing prevails.This is the case antitrust authorities have made against Qualcomm in so many overseas jurisdictions. It's the argument Apple made as well. A U.S. judge has taken their side, which projects an enormous impact on Qualcomm's business model. What That Means for Qualcomm StockMake no mistake: Koh's ruling will be trouble for Qualcomm if it is upheld. Licensing revenue would take a hit -- and that's a problem. Going back to fiscal 2016, before the Apple battle led to lower licensing revenue, the importance of licensing is apparent.Qualcomm's QCT (Qualcomm CDMA Technologies) unit generated $15.4 billion in revenue, down 10% year-over-year as shipments fell. Its pre-tax margins were 12%. Segment profit was $1.81 billion.QTL (Qualcomm Technology Licensing) revenue came in at $7.6 billion -- less than half that of QCT. But margins were a staggering 85%. That business generated profit of $6.53 billion.In other words, licensing accounted for 78% of total earnings. Even in FY18, with Apple's suppliers withholding billions of dollars in revenue, QTL still generated 54% of the company's profit. Those total profits, at the segment level, unsurprisingly were 22% lower than they were two years ago -- in large part due to Apple's withdrawal.Licensing revenue is massively important to QCOM's bottom line. But Koh's ruling could suggest that Qualcomm can't license its patents and sell its chips to the same customer for the same reasons. That would lower sales and reduce licensing revenue, the most profitable revenue Qualcomm has -- and in fact the most profitable revenue pretty much anyone in tech has.Qualcomm might have to lower its rates for other customers. The company would also have to license its technology to rivals, potentially allowing Intel and others into the baseband modem space. Given that Intel's weakness appears to be the key reason why Apple settled in the first place, that suggests more competition as well.Lower sales, lower margins, and more competition: it's a tough combination for Qualcomm. A Short Seller Highlights the Risk to Qualcomm StockBack in January, Kerrisdale Capital released its short case for QCOM stock based on the prediction that Qualcomm would lose in court. The firm estimated a revenue loss of $2.7 billion: 12% of fiscal 2018 sales. It projected that such a hit would lead EPS to plunge to $1.64 annually, due, again, to the impact on margins.As such, Kerrisdale concluded, QCOM stock potentially could fall as far as $21. That's not far off from back-of-the-envelope calculations that assume a roughly 13x P/E multiple broadly in line with the likes of INTC and AVGO.That seems too bearish at this point. The Apple settlement changes the calculations, though it's possible Apple could look to renegotiate should the FTC prevail. And it's unwise to simply take a short-seller's word for it: Kerrisdale had some big wins, but it famously erred with Straight Path Communications, acquired by Verizon (NYSE:VZ) after a bidding war with AT&T (NYSE:T).That said, Kerrisdale's broad point still holds -- and the firm is not alone in making it. Several Wall Street analysts cut their targets after Koh's decision to adjust for the new risk. An antitrust loss will irrevocably change Qualcomm's business model, hurting both revenue and earnings. Investors can -- and will -- argue about the exact impact going forward, but there will be an impact. Can Qualcomm Win on Appeal?Of course, that assumes that Qualcomm winds up losing for good -- which is not guaranteed. Last week Koh refused a request to stay the decision. Qualcomm said in response that it will ask the Ninth Circuit Court of Appeals for an appeal, a process that could take a year or more on its own.And it's possible Qualcomm will win. More than a few legal experts have criticized Koh's logic. Most notably, an FTC Commissioner writing on her own behalf in the Wall Street Journal said the decision "radically expanded a company's legal obligations to help its competitors." Even the Department of Justice has taken a notably different stance from its fellow regulatory agency.Other legal experts argue that Koh overreached. USC law professor Jonathan Barnett criticized the decision in an op-ed in The Hill on that basis. Barnett made a point echoed elsewhere: if Qualcomm's behavior was so anti-competitive, why have smartphone prices generally declined (at least outside of the iPhone)?It's exceedingly difficult to argue that end smartphone customers are somehow being deprived. Prices in many cases (particularly for Asian manufacturers) are declining. Innovation is proceeding at a breathtaking pace.Meanwhile, as others have pointed out, Apple -- the company likely most reliant on Qualcomm -- switched its baseband modem business to Intel. It's not Qualcomm's fault that effort failed. If anything, it highlights the fact that Qualcomm's R&D efforts are substantial -- and successful. It makes a better modem than Intel could. Should Qualcomm be punished for that? Where QCOM Sits NowIt's worth noting that, at the moment, QCOM stock sits only modestly below where it traded before Koh's decision was released. That doesn't necessarily mean that the market thinks the decision will be reversed.There has been good news elsewhere: The Huawei ban has been lifted, if partially. Chip stocks, helped recently by big earnings from Micron (NASDAQ:MU), have rallied.But there is a case that investors are being a little too sanguine relative to the antitrust risk. Qualcomm stock isn't necessarily expensive, at about 15x FY20 EPS estimates. Apple revenue should help growth beyond that as well. But 15x for a chip stock isn't cheap, even if a 3.2% dividend yield does help the case. INTC is at 11x CY20 EPS estimates, and AVGO at about 12x.Qualcomm stock is getting a premium -- and litigation risk aside, maybe it should. 5G is a bigger driver for Qualcomm than anything Intel has. Qualcomm has no competitors along the lines of Advanced Micro Devices (NASDAQ:AMD) or Nvidia (NASDAQ:NVDA). Broadcom thought Qualcomm was worth $82 per share -- and Qualcomm itself didn't believe that was enough. For the current business model, QCOM stock might be attractive at these levels (though it was more so at $65 just a few weeks ago). The Antitrust RiskTo own Qualcomm stock here, an investor has to have some faith that the antitrust case won't be a big deal. That seems too optimistic. It's easy to say that Microsoft weathered its own antitrust suit well, given that it is again heading toward a trillion-dollar market cap. But MSFT stock spent over a decade in the metaphorical desert after the resolution of its suit and the collapse of the dot-com boom.The FTC represents a very real threat to Qualcomm -- not just in terms of another potential fine. The business model that has cemented the company's dominance and driven some of the highest margins in the industry is at stake. Whatever the true financial impact of a permanent change would be, it will be significant. And investors, at the very least, need to understand that risk.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Retail Stocks to Buy That Are Down in 2019 * 7 of the Best SPDR ETFs -- Besides SPY and GLD * 5 Dividend Stocks to Buy From Across the Globe The post What the Antitrust Debate Means for Qualcomm Stock appeared first on InvestorPlace.
(Bloomberg) -- With the U.S. economic expansion getting longer and longer, nervous investors are pouring money into funds tracking the investment factor known as “quality.” It’s a category whose composition has changed.Gone are the days when having a rock-solid balance-sheet meant you made food, sold clothes or built industrial infrastructure. Now, technology firms are king, with chip manufacturers overrunning the list. The rules are the same -- quality denotes a high return on equity, low debt and lots of free cash flow. But the businesses that qualify have evolved.“These tech companies have kind of grown up and they meet the criteria,” said Nick Kalivas, senior equity product strategist for Invesco Ltd.’s ETF business. “They’re still more cyclical than kind of the old-school quality, so that’s a really interesting dynamic that has surfaced.”For bubble-watchers, it’s another example of how much the market has changed since the dot-com days. Agents of volatility back then, computer and software makers now are some of the oldest and most profitable firms around. Their contribution to the S&P 500’s overall earnings has quadrupled in two decades.Smart-beta ETFs that focus on quality stocks have taken in $3 billion in 2019, the best half-year period on record. As investors question the staying power of the bull run and economic cycle, finding companies with sound finances and profitability has become a priority.The $1.5 billion Invesco S&P 500 Quality ETF, which trades under the ticker SPHQ, devotes more of its cash to technology stocks than any other sector. A Bloomberg Portfolio analysis shows the fund’s tech allocation has steadily risen over the past decade, and now the ETF holds just about double the amount of tech stocks it did at the end of 2009.While much of that is in software and services, semiconductor stocks also have a bigger role. For years, Linear Technology Corp. was the lone semiconductor company that met the criteria for inclusion in the Invesco quality fund. Now there are seven, with popular names such as Applied Materials Inc., Intel Corp., Qualcomm Inc. and Texas Instruments Inc. making the cut. Linear was acquired three years ago and no longer exists.But the inclusion of more cyclical stocks also means the quality factor is experiencing a “step up” in risk, Kalivas said. Tech stocks are by nature higher-beta than their predecessors and that could amplify volatility going up and coming down. At the same time, “it’s hard to get fired for having something that returns a lot on equity, has low debt, and generates a lot of cash,” he said.Volatility has been friendly to quality owners in 2019. The Invesco S&P 500 Quality ETF is up 20% year-to-date, outperforming the broader S&P 500 Index, juiced by the 29% gain in technology stocks. Data compiled by Bloomberg shows that among the five stocks with the most influence on SPHQ, three were tech companies.Whether or not the makeover provides support when the stock market is falling is yet to be seen.“If the academic research plays out, that’s exactly what should happen,” Kalivas said. “They should not have that big downside, their ability to generate cash should support them.”To contact the reporter on this story: Sarah Ponczek in New York at email@example.comTo contact the editors responsible for this story: Jeremy Herron at firstname.lastname@example.org, Chris NagiFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The United States has urged South Korea to improve procedures in competition hearings led by the Asian country's fair trade agency, the Office of the U.S. Trade Representative (USTR) said on Tuesday. U.S. parties had been denied certain rights, including the opportunity to review and rebut evidence against them, USTR said, adding that pending amendments to South Korea's related law failed to address U.S. concerns. It did not say whether this consultation was related to any specific company or case, but the meeting was held as U.S. smartphone chip maker Qualcomm Inc has been fighting an antitrust ruling by a South Korean agency.
It's high time modern features like dual cameras, longer aspect ratio displaysand VoLTE calling came to sub-$100 phones and with Qualcomm's latest chipset,they just might real soon
Qualcomm (NASDAQ:QCOM) has become a tech stock that no longer trades like a tech stock. The shares jumped almost 50% in mid-April after the chip maker won a settlement with Apple (NASDAQ:AAPL), then QCOM stock lost half that gain after Judge Lucy Koh ruled it was violating antitrust laws.Source: Qualcomm Instead, it trades like a defendant.Since the start of June it has been slowly climbing a wall of worry over the impact of Koh's decision. Fundamentals -- expectations it will earn 62 cents per share on revenue of $5.11 billion when it next reports earnings July 31 -- don't seem to matter anymore.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Do Fundamentals Matter?Qualcomm opened for trade July 8 at about $76.30 per share. That's a market cap of $93 billion. It trades at about 4.2 times last year's $22 billion in revenue and 40.5x last year's earnings, with a fat 62 cents per share dividend reflecting a 3.2% yield. * 10 Stocks That Should Be Every Young Investor's First Choice That dividend is an investor hedge against legal uncertainties that have plagued the company as CEO Steve Mollenkopf has defended Qualcomm's business model against challengers from around the world.He's had a good track record. Qualcomm has won favorable decisions in Korean, Chinese and U.S. courts. The Apple settlement seemed to settle its right to tie patents to chip purchases. But the decision that it must renegotiate those patent licenses , which the court ruled over the July 4 holiday won't be delayed, has it claiming it is about to suffer "irreparable harm" after it earlier sided with the Federal Trade Commission's view that Qualcomm abused its dominant market position to force customers to pay excessive patent licensing fees.European competition commissioner Margarethe Vestager is also planning on demanding another huge fine against Qualcomm over its policies. What About 5G?Meanwhile 5G, the new mobile standard that is in the process of being rolled out to phones, base stations, and machines around the world, opening vast new swaths of frequency spectrum to commercialization, is practically being ignored.Qualcomm has been quietly going about the business of having its chips certified, and winning the right to charge users for bits used in autonomous cars.The car decision emphasizes that the growth of 5G won't just come from people watching cat videos. It will come from machines communicating with "smart city" infrastructure that can prevent traffic jams and schedule maintenance in utility systems and factories. * 7 Retail Stocks to Buy That Are Down in 2019 New markets like augmented reality and virtual reality also depend on having practically unlimited bandwidth. This has led analysts to bring back their hockey stick graphs predicting tremendous growth. Qualcomm's new legal battlefield involves working with phone companies to make sure people pay for that bandwidth, assuring that the bulk of growth comes from licensed rather than unlicensed frequencies.In the near term, however, 5G is also subject to tremendous amounts of fear, uncertainty and doubt. Industry hype is pushing users to upgrade even before the necessary infrastructure is in place, with many people thinking they have it even when they don't. Bottom Line on Qualcomm StockFortunately for Qualcomm stock owners, the company is better positioned than any of its customers to win the 5G jackpot.But that jackpot is so large, and Qualcomm has been so aggressive in its licensing policies, that there's legitimate fear the company may be forced by courts and regulators to back off.QCOM stock investors may be both overestimating how well the company's lawyers can do, but underestimating just how much money can be saved, and earned, in a world of wireless sensors and networks that control, and maintain, all the things around us.The 5G revolution won't happen all at once. Qualcomm won't win as much control over it as it's seeking. But it's going to be big enough to justify a long-term investor seeking an entry point in Qualcomm stock after any legal setback.Dana Blankenhorn is a financial and technology journalist. He is the author of a new environmental story, Bridget O'Flynn and the Bear, available now at the Amazon Kindle store. Write him at email@example.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in AAPL. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 A-Rated Stocks to Buy for the Rest of 2019 * 7 Education Stocks to Buy for the Future of Academia * 5 Stocks to Buy as You Rebalance Your Portfolio The post Qualcomm Stock Reacts to the Uncertainty of a Wall of Legal Worry appeared first on InvestorPlace.
Margrethe Vestager on Tuesday fined Japanese company Sanrio €6.2m for abusing its ownership of the popular cartoon character. The commission said Sanrio had banned licence holders from selling outside of their individual EU country, and had taken more indirect measures such as restricting the languages that could be used on the products. The commission said that the illegal curbs, which flout single market rules, were in place from 2008-18.