Qualcomm to Acquire DesignArt - Analyst Blog


San Diego-based Qualcomm Inc. ( QCOM ), one of the leading manufacturers of CDMA-based smartphone chipsets, plans to acquire the Israeli firm DesignArt. This will be Qualcomm's second acquisition in Israel following the buyout of mobile web company iSkoot in 2010.

DesignArt Networks specializes in developing data-centric mobile radio access network (RAN) coupled with highly integrated system-on-chip (SoC) technology. Moreover, it provides trial-ready embedded SW support for 3G/4G and high-speed wireless backhaul infrastructure.

Qualcomm is expected to pay anywhere between $120 to $140 million to purchase DesignArt Networks. The acquisition is expected to boost Qualcomm's Atheros Division, which focuses on developing Wi-Fi chips for televisions, video games, printers, and other home devices.

We believe that over the long haul, diversification of its product portfolio, strong balance sheet and increased demand for smartphones and tablets will act as positive catalysts for the stock.

On the downside, we believe that increasing the supplier base will expand its operating expenses in the near term. Moreover, stiff competition from rival NVIDIA Corporation 's ( NVDA ) Tegra 3 quad-core processors may exert additional pressure on Qualcomm's market share in 2012, as they might lose certain wireless equipment manufacturers due to the shortage of chipsets. We thus maintain our long-term Neutral recommendation on Qualcomm.

Currently, Qualcomm retains a Zacks #3 Rank, implying a short-term Hold rating on the stock.

Qualcomm Inc. designs, develops, and supplies semiconductors and collects royalties on wireless handheld devices and infrastructure based on its dominant position in CDMA and other related technology patents.

NVIDIA CORP (NVDA): Free Stock Analysis Report
QUALCOMM INC (QCOM): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: NVDA , QCOM



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