Outlook at Qualcomm is optimistic
By Don Bauder
April 15, 2001
Handset vendors in the mobile phone business face a slower market, says
Michael E. Ching of Merrill Lynch, but "Qualcomm is less affected by the
transition."
That's because Qualcomm "has no manufacturing operations, having sold its
handsets and wireless infrastructure business over the past three years," the
analyst says.
Qualcomm primarily sells its intellectual property through chipsets (45 percent
of sales) and technology licensing and royalty agreements (26 percent).
The company is the leading supplier of CDMA, or code division multiple
access, semiconductors, although it will spin off the business later this year,
Ching says.
Qualcomm estimates that 90 million CDMA phones will be sold this year,
though Ching thinks 82 million will be more like it.
Qualcomm will be insulated from problems in Europe's non-CDMA market,
but overall, "CDMA handset expectations for 2001 are optimistic," he says.
Ching looks for the company to earn $1.25 a share in 2001, up from $1.05,
and he thinks the valuation of Qualcomm is $60 per share. He is neutral on
the stock for the intermediate term, but thinks it is a long-term buy.
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