Post by Deleted on Jun 1, 2018 15:00:14 GMT
Qualcomm has been on quite the roller coaster over the past few months.
In the wake of President Trump’s extraordinary intervention in March to stop Broadcom AVGO, +1.46% from acquiring Qualcomm QCOM, +0.40% on national security grounds, the rumor mill about this maker of computer chips and wireless telecom equipment has been spinning at what feels like record speed. There’s been speculation about a takeover bid by former chairman Paul Jacobs and a series of opinion articles that seem to overplay the financial impact of Qualcomm’s legal battle with Apple AAPL, +1.18% over royalty payments.
The stock is down close to 9% this year, compared to a gain of more than 8% in the tech-heavy Nasdaq Composite COMP, +1.17% Even the S&P 500 SPX, +0.91% is up modestly.
I believe investors are being shortsighted about Qualcomm and are overlooking the bigger story of its resiliency.
First, these are four key factors that have impacted investors’ faith in Qualcomm’s stock:
• International regulatory action against Qualcomm, which resulted in the kind of hefty fines usually reserved for tech giants like Apple, Google, Microsoft, and Samsung.
• Qualcomm’s ongoing legal dispute with Apple, which Apple has leveraged to stop making royalty payments to Qualcomm, to the tune of billions of dollars so far, and counting.
• Disappointment among some investors over the collapse of Broadcom’s hostile takeover bid. They saw the acquisition as a path to better stock performance, at least in the short term.
• Questions regarding Qualcomm’s ability to deliver the kinds of returns expected from high-tech stocks leading to years of stock underperformance.
Time
Qualcomm Inc.
Aug 17
Oct 17
Dec 17
Feb 18
Apr 18
Jun 18
US:QCOM$45$50$55$60$65$70
Here is why I see opportunity with Qualcomm:
First, it is seeing improvements on the regulatory and legal fronts. Decisions in the patent infringement cases against Apple could begin arriving in June, which could have substantial implications for both companies. If Qualcomm receives favorable rulings early on, there is a good chance that Apple and Qualcomm will look for common ground sooner rather than later.
Second, there are signs that China will finally greenlight the acquisition of NXP Semiconductors NXPI, -0.63% which will further diversify Qualcomm’s business and immediately increase its position in important industries like the automotive sector.
The final and perhaps most important reason I’m bullish on Qualcomm is 5G. This next wave of mobile connectivity will bring massive technology and infrastructure investments around the world, which means growth for both Qualcomm’s licensing and chip businesses. With their an opportunity-rich patent portfolio and deep bench of intellectual property contributing to 5G, Qualcomm is ideally positioned to reap the benefits of global 5G deployments due to start this year and which are expected to accelerate into the next decade.
Read: Qualcomm will gain more than its rivals do, as artificial intelligence grows at the ‘edge’
Qualcomm certainly has faced some challenges recently, and these are sufficiently reflected in the stock price. It would be naive to predict that any company’s long-term success is a given, but I genuinely believe its position is much stronger than what a number of journalists and pundits have argued in the past year. Qualcomm’s potential, fueled in part by a major acquisition and the launch of 5G, is something investors should pay particular attention to in the coming months. If things fall into place as I think they will, and Qualcomm’s battle with Apple is resolved over the next year, Qualcomm could become one of the hottest tech stocks later this year and throughout 2019.
In the wake of President Trump’s extraordinary intervention in March to stop Broadcom AVGO, +1.46% from acquiring Qualcomm QCOM, +0.40% on national security grounds, the rumor mill about this maker of computer chips and wireless telecom equipment has been spinning at what feels like record speed. There’s been speculation about a takeover bid by former chairman Paul Jacobs and a series of opinion articles that seem to overplay the financial impact of Qualcomm’s legal battle with Apple AAPL, +1.18% over royalty payments.
The stock is down close to 9% this year, compared to a gain of more than 8% in the tech-heavy Nasdaq Composite COMP, +1.17% Even the S&P 500 SPX, +0.91% is up modestly.
I believe investors are being shortsighted about Qualcomm and are overlooking the bigger story of its resiliency.
First, these are four key factors that have impacted investors’ faith in Qualcomm’s stock:
• International regulatory action against Qualcomm, which resulted in the kind of hefty fines usually reserved for tech giants like Apple, Google, Microsoft, and Samsung.
• Qualcomm’s ongoing legal dispute with Apple, which Apple has leveraged to stop making royalty payments to Qualcomm, to the tune of billions of dollars so far, and counting.
• Disappointment among some investors over the collapse of Broadcom’s hostile takeover bid. They saw the acquisition as a path to better stock performance, at least in the short term.
• Questions regarding Qualcomm’s ability to deliver the kinds of returns expected from high-tech stocks leading to years of stock underperformance.
Time
Qualcomm Inc.
Aug 17
Oct 17
Dec 17
Feb 18
Apr 18
Jun 18
US:QCOM$45$50$55$60$65$70
Here is why I see opportunity with Qualcomm:
First, it is seeing improvements on the regulatory and legal fronts. Decisions in the patent infringement cases against Apple could begin arriving in June, which could have substantial implications for both companies. If Qualcomm receives favorable rulings early on, there is a good chance that Apple and Qualcomm will look for common ground sooner rather than later.
Second, there are signs that China will finally greenlight the acquisition of NXP Semiconductors NXPI, -0.63% which will further diversify Qualcomm’s business and immediately increase its position in important industries like the automotive sector.
The final and perhaps most important reason I’m bullish on Qualcomm is 5G. This next wave of mobile connectivity will bring massive technology and infrastructure investments around the world, which means growth for both Qualcomm’s licensing and chip businesses. With their an opportunity-rich patent portfolio and deep bench of intellectual property contributing to 5G, Qualcomm is ideally positioned to reap the benefits of global 5G deployments due to start this year and which are expected to accelerate into the next decade.
Read: Qualcomm will gain more than its rivals do, as artificial intelligence grows at the ‘edge’
Qualcomm certainly has faced some challenges recently, and these are sufficiently reflected in the stock price. It would be naive to predict that any company’s long-term success is a given, but I genuinely believe its position is much stronger than what a number of journalists and pundits have argued in the past year. Qualcomm’s potential, fueled in part by a major acquisition and the launch of 5G, is something investors should pay particular attention to in the coming months. If things fall into place as I think they will, and Qualcomm’s battle with Apple is resolved over the next year, Qualcomm could become one of the hottest tech stocks later this year and throughout 2019.