Northforce, re: QCOM $/sh Improvement
” The simple solution is ... we need more earnings and that's only going to happen with more chipsets out the door (ie market share), a higher mix of smartphone usage, higher margins and faster turns on R&D expenditures.
That's all MBA material which some may think supports the thinking that Q has graduated into becoming too highly weighted on the engineering and lawyering front.
It will only be after SnapDragon and Mirasol launch, that your expectations could be met…”
>>>>>>>>>>
That’s true, but how many of us--- especially those LTBHers acquiring QCOM after 2000--- think more immediate action is needed?
A more immediate solution, IMO, is to begin Opex / headcount cutting.
Last year, to Paul’s / BOD credit Opex growth was significantly reduced ( + 2% YoY?). But another year’s gone by with yet another year of a limited EPS growth forecast / and a distressing $/share collapse from such.
Paul stated a year ago November (11/ ’08) the company was committed to controlling cost, freezing headcount growth, and other actions if conditions worsened.
Snips >>>>
“In terms of expense management, obviously we are very focused on that and definitely are adapting to the current environment and essentially shutting down headcount growth. There are a lot of opportunities ahead of us with a number of new technologies coming to market.
So we think that we are making the right investments where we generally would have added headcount to go after those, so we are making hard decisions to shut some projects down and reallocate resources. Clearly, if conditions worsen from here, we have contingency plans, and we have gone through and prioritized projects. We will continue that process. So, I think that we will be able to adapt”
IMO, conditions have worsened!......... Perhaps not entirely from the economy, but from a competitive standpoint ( & “execution”)as well.
..+ Chipset sales and ASPs appear to be under considerable pressure
..+ Snapdragon, was first announced in 2006, was first reported to be sampling in Q3 FY07, and a Nov ’08 QCOM PR stated “…in customer’s devices in the first half of 2009” ---, but we’re only now finally begin to see multiple device launches with Snapdragon.
Has QCOM lost its technology “edge”-?
..+ first to market / shorter time to market (Snapdragon 4+ years in development) / integrated solution
Has QCOM’s “empire” become bloated?
..+ In reading the latest y/e 10K, QCOM’s headcount was not frozen, instead ---growing ..”by approximately 700 primarily due to increases in engineering resources “ to “… 16,100 full-time, part-time, and temporary employees “. That was of Sept ’09.
..+ In this Northforce post --- QCOM Video—I recall the director of finance stating QCOM’s headcount numbered close to 17,000 (may be rounding up?) .
..+ Less than two years ago Apple acquired P.A. Semi, a 150-person chip design group. So, in about two years was that relatively small group apparently able to develop and commercialize the iPad processor? Granted, it’s not as fully integrated (various radios / GPS, etc) as the Snapdragon, but….?
Is it now time for us / Paul / BOD-
..+ to ask for an accounting (bottoms up justification) of what these 16,100 to 17,000 employees are doing?
..+ to rank / prioritize projects (and employees) and defer projects where required in order to meet strategic goals with the QCOM shareholder ‘s objectives elevated higher on the priority list (increase the bottom line, EPS, EPS growth rate, multiple, $/sh )?
…….Note- It’s not just a shareholder issue---- employee motivation is also at issue with options / savings plan accounts.
Key Metrics Summary-
………………………………..2000…..2008…..2009…....2010 est………’00 v ’10 % inc
CDMA/ WCDMA Devices…….66M.....480M…..518M…..625M……………...847%
Headcount*………..………….6,300….15,400…16,100….17.000?.................169%
EPS…………………………….$0.85…..$1.90….$0.95…..$1.76 mp GAAP…107%
………………………………………………………FY10.….$2.20 mp PF
………………………………………………………FY11…...$2.46 PF Consensus + 12% **
………………………………………………………FY12…..$2.76 PF Consensus + 12% **
* note 1- QCOM being fabless, proportional headcount growth is not required to support increased chipset volumes. In fact, chipset volumes / scale should enable margin expansion.
** note 2- EPS growth should be much better than 12%, at least 15% IMO with- (per Morgan Stanley)
……+ 3G ramping – 2010 inflection point / 5 year CAGR 25%
……+ Netbooks ramping- 32% CAGR
……+ Internet tablets ramping- 117% CAGR
……+ Embedded other devices ramping- 64% CAGR
……+ 3G enabled smartphones ramping- 48% CAGR
I’ve gotta believe Paul, BOD, Kietel, have our concerns upper mind, and are presently burning the mid night oil working on the above. I’ll be deeply disappointed if cost cutting is not prominently addressed at the ASM. |
