After QCOM's previous disappointment at the end of January, they gapped down on huge volume, but the final low didn't happen till a month later.
2FQ10 results:
Rev. 2.66B, from 2.45B in 1Q09, = a puny 9% increase YOY.
EPS $0.46 GAAP, $0.59 non-GAAP
93M MSM shipments, from 69M, = 35% increase YOY
Operating cash flow 793M$, down 37% YOY
free cash flow 823M$, down 29% YOY
The fact that the stock wasn't going up in the last 30 days (instead, drifting sideways in the 42-44$ area), while the market was going up, and while analysts were raising earnings estimates, was a warning sign.
EPS trend, last 6 years:
(I use GAAP numbers, because the definitions can't be changed every quarter.)
1.26 2005
1.44 2006
1.95 2007
1.90 2008
0.95 2009
1.77 2010
Guidance on GAAP FY10 EPS was $1.77 (midpoint of $1.71-1.82), giving a PE of 39/1.77 = 22.
Revenue trend (B$):
5.67 2005
7.53 2006
8.87 2007
11.14 2008
10.42 2009
10.7 2010 (Revenue guidance for FY2010 was 10.4-11B)
So, from 2005 to 2010 (guided), sales went up 89%, while EPS went up only 40%. If QCOM had Buffett's "deep moat", with profits protected by all those patents and proprietary technology, then EPS should be going up as fast as revenues are.
Also, clearly revenue growth has stagnated the last 2 years. Bad 2009 numbers didn't bother me, as everyone had bad numbers that year. However, 2010 revenue growth YOY of only 3% is worse than the big drug companies (some of whom have a single-digit PE, while paying a dividend yield of over 5%).
Shares:
They talk about "billions of dollars in share repurchases; capital returned to shareholders". But:
total shares, fully diluted:
1678M 3/28/10 (net 27M share increase YOY, and 5M for the quarter)
1673M 9/27/09 (FY 2009 end)
1660M 2008 FYE
1693M 2007 FYE
1711M 2006 FYE
1694M 2005 FYE
So, from 2005 till now, total shares decreased by 1694M-1678M = 16M shares. That represents a total reduction in shares, of less than 1% from 2005 till now. |
