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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 173.96+1.4%3:59 PM EST
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To: Sawtooth who wrote (21653)1/20/1999 10:55:00 AM
From: Clarksterh  Read Replies (3) of 152472
 
Not to be overly negative, but this earnings report was not particularly good, so it should be no surprise that today the stock is going down again (last quarter they had substantially better earnings in many ways and it still went down):

1) Revenue growth is 'only' 20% Q/(Q-1Y) and sequentially the revenue growth was very small given that this is the hottest quarter of the year.

2) Royalties are not growing Q/Q.

3) The earnings surprise was apparently caused by the sale of some investments. This is not sustainable.

I have not yet listened to the CC, but the earnings data by itself is not particularly good, although it should be noted that this isn't a surprise since this is about what I would have expected from last quarters CC. (However, I 'expect' surprises from Qualcomm, so in that sense I hoped for more.) My view of their problems:

1) Infrastructure.

2) Capacity constrained for handsets? They are now at 1.6M for the quarter and their capacity with everything perfect is 1.8M. Also, as everyone has noted, no one ever has Q phones in stock.

3) What's up with royalty growth? - Certainly part of the problem is the transition from being license driven to royalty driven, but even accounting for the only mentioned licensee of last year Q1, there is only a 10 to 20% growth in royalties. This is not particularly good, since it indicates that the growth of CDMA is anemic. I suspect that there is something funny going on here in their accounting (since I suspect much better growth than that), but it needs to be explained.

Comments?

Clark
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