), one of the leading manufacturers of smartphone chipsets, has
successfully completed the business restructuring process over the
last three months to create a separate operational unit called the
Qualcomm Technologies Inc.
The new business division is expected to be operational from the
first quarter of 2013. This division will contain a research and
development unit along with the Qualcomm CDMA Technologies (QCT)
segment, which comprises the semiconductor business. The holding
company will continue to manage the Qualcomm Technology Licensing
(QTL) business segment and will also look after the corporate
affairs of the company.
Most technology companies remain exposed to the threat of
intellectual property infringement and Qualcomm is no different.
Earlier, the company faced many legal battles, which resulted in
heavy litigation expenses. In, 2009, Qualcomm lost a long pending
) for violating its patent that resulted in an $891 million bailout
for the company.
So to avoid such legal issues, Qualcomm decided to start a
separate business unit primarily dealing with technology licenses
as well as giving the opportunity to Qualcomm Technologies Inc.
division to work closely with the Android application developer, in
order to create advanced processors for future.
Qualcomm is already providing necessary tools and technical
support to Android application developer in order to closely
integrate the programs they develop into the Snapdragon S4 8960
processor. So segregation of its QTL segment will help the company
avoid any legal issues with the open source developer. Moreover,
the authority to grant license will lie solely with the parent
company, hence providing full security to its patent licenses.
The current Zacks Consensus Estimate for Qualcomm Inc. is pegged
at 71 cents for the fiscal fourth quarter 2012 with a growth rate
estimate of 3.82%. For fiscal years 2012 and 2013, the Zacks
Consensus Estimates stand at $3.19 and $3.73 with a growth rate of
6.02% and 16.79%, respectively.
We maintain our long-term Neutral recommendation for Qualcomm
Inc. Currently, it has a Zacks #2 Rank, implying a short-term Buy
rating on the stock.
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