Weekly Mobile Notes: Apple, BlackBerry And Qualcomm


The past week was an exciting one for the mobile sector. BlackBerry ( BBRY ) gained over 6% in trading Wednesday after the CEO's comments sparked optimism that the company may be winning over users from other platforms.

Samsung ( SSNLF ) bought a 3% stake in Sharp for $111 million, securing steady supplies for its rapidly growing smartphone sales and giving Apple pause in its plans to diversify its supply chain away from Samsung. Qualcomm announced a 40% hike in its quarterly dividends and upped its share buyback plan by $1 billion, rewarding its shareholders amid burgeoning demand for mobile devices and LTE chipsets.


Samsung's recent investment in Sharp could mean trouble for Apple down the road. The iPhone maker has been rumored to be diversifying its supply chain away from Samsung in order to reduce its dependence on a company that is also its fiercest rival in the mobile device space. But Samsung's decision to buy a 3% stake in Sharp, a struggling display maker that is also one of Apple's bigger supply partners, makes that breakup tougher to happen.

Apple is believed to source about a third of its display panels from Sharp, and it is therefore in its interest if the display maker manages to raise additional cash and stay in business. But Samsung's investment in Sharp, which secures it a steady supply of LCD display panels, should raise Apple's heckles. Apple likes to tightly control its supply chain vendors, and having to compete with Samsung for Sharp's production capacities takes away some of that control. Moreover, Samsung's growing smartphone business means that it is continuously looking to diversify its supply chain, and Apple will be threatened if its closest rival becomes one of Sharp's major customers in the future. While a rather small 3% stake doesn't give Samsung enough of a leverage on Sharp to affect Apple's interests in the near term, it does put pressure on Apple to look for ways to bolster its display supply chain outside of Sharp, in order to protect its long term interests.


BlackBerry's stock rose more than 6% Wednesday amid optimism that customers are switching from rival platforms such as iOS and Android to BlackBerry. Speaking to Spanish newspaper Expansion, CEO Thorsten Heins said that the new BB10 smartphones have been "attractive for customers coming from other platforms" -  a customer response that he found "a little surprising." This comes not long after the positive commentary that had followed the Z10′s launch in Canada last month when the company had said that sales were more than 50% better than any other launch day for BB in the country. The positive sentiment has boiled over to the enterprise segment as well, where BlackBerry has managed to secure two major deals this week: one with the German government and the other in the U.K. with a mental health organization.

While it may indeed be a big positive for BlackBerry if it has managed to take market share away from Apple or Android with the BB10 launch, it is also rather premature to draw such a conclusion from the recent comments without actual numbers. Considering that BlackBerry's smartphone market share has been on the decline for quite some time and that the smartphone market has more than doubled in size over the last two years, it is hard to put any kind of context around the announcement. Moreover, these are still early days and BlackBerry will need to ensure that the retail demand doesn't fizzle out post the initial euphoria in order to stage a turnaround in its smartphone business - something that could prove exceedingly tough in a market largely dominated by the iOS and Android. (see Optimism Fuels BlackBerry Stock Though Uncertainty On Future Viability Remains )


Having ridden the mobile revolution to new highs, Qualcomm rewarded its shareholders with the announcement of a 40% hike in quarterly dividends and a new $5 billion share buyback program. Qualcomm's shareholders are now eligible for a quarterly dividend of 35 cents a share, effective March 27, up from 25 cents previously. At the same time, investors will benefit from the bigger share repurchase program that replaces the existing $4 billion one, and shows the management's willingness to reinvest in the stock that is trading close to its all-time highs. The higher cash allocation to shareholders is due to the strong operating cash flows that Qualcomm has been generating over the past year. The company generated about $6 billion in operating cash flows in FY 2012, around 20% higher than the previous fiscal year. (see Qualcomm Banks On Strong Cash Flows To Return More Capital To Shareholders )

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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 , Investing Ideas , Stocks , US Markets

Referenced Stocks: AAPL , BBRY , QCOM , SSNLF



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