We reiterate our long-term Neutral recommendation on
). The company reported mixed financial results for the fourth
quarter of fiscal 2013. Although total revenue outpaced the Zacks
Consensus Estimate, net income fell below the same. Qualcomm
currently has a Zacks Rank #3 (Hold).
Why the Reiteration?
Qualcomm provided a weak financial outlook for the first
quarter and full fiscal 2014. Management cited decreasing growth
rate of the high-end smartphones and growing competition in the
low-end smartphone chipset segment are the primary reason for
weak guidance.The company is facing severe competitive threat
from its closest rival,
), which has been redesigning its chipsets for the mobile
computing market. Intel has started shipment of its first
multi-mode LTE baseband modem.
Competition is likely to emanate from formidable rivals like
). Broadcom already introduced its first LTE baseband chipset in
the market and Nvidia introduced Tegra 4i, its first
LTE-integrated application processor. There is also competition
from low-cost chip suppliers like Mediatek of Taiwan, VIA
Technologies of China and Spreadtrum Communications.
Nevertheless, we believe that the long-term fundamentals of
Qualcomm remain intriguing given the increasing demand for 4G
LTE-enabled mobile handsets in the developed countries, rapid
transition from 2G to 3G/4G in China and other emerging markets
and increasing licensing revenues. Recently, Qualcomm unveiled an
innovative smartwatch called "Toq". This smartwatch can
simultaneously receive phone calls, send messages and play music.
The new product will be available in the market from Dec 2,
Moreover, Qualcomm has a highly diversified product portfolio.
Several original equipment manufacturers are adopting high-speed
3G and 4G technologies for connecting tablets, eReaders,
machine-to-machine communication devices, and gaming devices.
Qualcomm's Snapdragon platform and Gobi platform for global
wireless connectivity support almost all varieties of mobile
BROADCOM CORP-A (BRCM): Free Stock Analysis
INTEL CORP (INTC): Free Stock Analysis Report
NVIDIA CORP (NVDA): Free Stock Analysis
QUALCOMM INC (QCOM): Free Stock Analysis
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