We upgrade our recommendation for Qualcomm Inc. (QCOM) to Neutral, which means the stock will perform in line with the broader market. The company’s first quarter of fiscal 2010 financial results was broadly in line with the Zacks Consensus Estimates. According to our assessment, in 2010 Qualcomm may become the first CDMA chipset developer with the ability to support all existing software platforms for smartphone.
Qualcomm is the major chipset supplier for Research In Motion’s (RIMM) BlackBerry and Andriod-based smartphones. The company provided chipset for the newly launched Google Inc’s (GOOG) Nexus One smartphone. It is also a leading chipset supplier of Symbian platform to Nokia Corp. (NOK). Recently, Qualcomm announced that it will be the first company to support integrated chipset solutions for all smartphones that will be based on Microsoft Corp.’s (MSFT) Windows Phone 7 series. We also expect that the company may provide chipset solutions to Apple Inc’s (AAPL) 3G iPhones in 2010.
Several large wireless operators are upgrading their CDMA networks to EV-DO Rev A technology provided by Qualcomm. Demand is likely to increase for single chip products addressing 1xEV-DO Rev A networks, which reduces the cost of mobile broadband devices and increases uplink speeds by more than 10 fold. As of now approximately 85% of total wireless operators throughout the world have upgraded to 3G networks. At the end of 2009, there were about 945 million 3G subscribers worldwide, up 30% year-over-year. Various industry sources predicted that smartphone shipments as a percentage of total mobile handset shipment are expected to increase from 20% in 2009 to nearly 40% by 2014.
The company’s new venture in the small-sized laptop market leveraging its state-of-the art Snapdragon platform also gets initial market traction which provides future growth opportunity. Robust growth of 3G networks and a solid net cash position of nearly $19 billion, also serve as long-term catalysts for the company. However, we believe that these positives have already been reflected in the current valuation, leaving little room for above-market gains.
Read the full analyst report on “QCOM”
Read the full analyst report on “RIMM”
Read the full analyst report on “GOOG”
Read the full analyst report on “NOK”
Read the full analyst report on “MSFT”
Read the full analyst report on “AAPL”
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