Qualcomm: Apple Q3 Dip Didn’t Hurt, Says Bernstein
By Tiernan Ray
A few different analysts this morning updated their thoughts on Qualcomm (QCOM) after reviewing select data points.
Qualcomm’s fiscal Q1, which ends this month, is affected by royalty payments on smartphones that shipped in Q3, producing a quarter’s lag.
Sanford Bernstein’s Stacy Rasgon, who rates Qualcomm shares Outperform, notes that the handset industry shipped about 3.1% more 3G handsets in Q3 than in Q2, which was less than the seasonal average.
The big point is that Apple (AAPL) had the largest quarter-to-quarter decline in units shipped last quarter.
You’ll recall that Apple’s Q3 results, its fiscal Q4, missed expectations as sales of 17.1 million iPhones were well below the 19 million to 20 million units analysts had been modeling at the time, as people waited for the iPhone 4S.
As a result of the iPhone lag last quarter, overall industry average selling price was way down.
But because Qualcomm gets paid differently for its baseband chips in the iPhone than it does in other phones, it probably didn’t feel much of the effect of Apple’s shipment decline in Q3:
As we have written about previously, AAPL (alone of all the major handset OEMs) does not have a 3G license with QCOM. Instead, the royalty fee is paid by the contract manufacturer. Consequently, the effective ASP QCOM “books” on the iPhone is not the >$600 average iPhone price, but rather something much closer to the COGS (perhaps ~$250 given AAPL’s iPhone gross margins). Consequently, we believe the effective 3G handset ASP seen by QCOM would likely be near the better end of the range suggested by our analysis (e.g. flattish to down a bit, rather than down in the mid to high single digits).
Qualcomm shares this morning are down 24 cents, or half a percent, at $54.25.
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