Yesterday,
Qualcomm Inc.
(
QCOM
) announced that its board of directors has approved a 16% hike in
dividend rate effective immediately. Quarterly dividend rate moved
up to 25 cents per share from 21.5 cents per share. Annualized
dividend rate will be $1 per share. In addition, the board also
authorized a new $4 billion share buyback program. The new stock
repurchase program will replace the company's existing $3 billion
program, which had approximately $948 million of repurchase
authority remaining. Qualcomm declared that the new plan, with $3.5
billion (net of 3 outstanding put options for total cost of $511
million) of available authority, has no expiration date.
During the last 12 months, Qualcomm continued with its dream
performance. In the previous quarter, net income was up 20% year
over year and a massive 33% sequentially, reflecting the company's
operating efficiency. It has nearly $22 billion of cash and
marketable securities on its balance sheet. Management is quite
confident that the company will be able to maintain its current
pace of top- and bottom-line growth for at least the next five
years.
We believe there are primarily four reasons for this positive
outlook: (1) gradual introduction of 4G LTE enabled mobile handsets
in the developed markets of the U.S., Japan, and South Korea (2)
massive growth of 3G smartphones in the emerging markets,
particularly in China, where the company has a strong foothold (3)
Qualcomm's growing association with
Apple Inc.
(
AAPL
) for its legendary iPhones and iPADs and (4) a diversified product
portfolio.
Furthermore, Qualcomm received a shot in its arm from the
upcoming Windows 8 operating system of
Microsoft Corp.
(
MSFT
). The two entities are collaborating to develop chipsets from
Snapdragon platform for notebook and tablets that will use Windows
8 operating system. In addition, Qualcomm's Gobi mobile Internet
connectivity solutions will provide 3G/4G LTE connectivity to those
devices that will run on Windows 8 software. Snapdragon also
supports Windows Phone 7 operating system. Qualcomm is the sole
chipset developer for both Windows smartphones and Windows
notebooks.
APPLE INC (
AAPL
): Free Stock Analysis Report
MICROSOFT CORP (
MSFT
): Free Stock Analysis Report
QUALCOMM INC (
QCOM
): Free Stock Analysis Report
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