We reaffirm our Underperform recommendation for QUALCOMM (QCOM) following its first quarter of fiscal 2010 financial results. Although first quarter results broadly met the Zacks Consensus Estimates, the company reduced its previous guidance for full fiscal 2010.
Management cited increasing competition, slower recovery of high-end mobile phones in the developed markets, particularly in Europe and Japan; together with relative strength of the low-end mobile phones in the emerging markets are the primary reasons for this disappointing outlook.
Average revenue per MSM chipset declined as a result of lower ASP of 3G mobile phones. We expect this trend to continue in 2010 leaving little room for QUALCOMM’s top-line recovery.Zacks Investment Research
