Qualcomm Inc.QCOM

Morningstar Rating

Stock Research and Analysis

by Brian Colello, CPA

Qualcomm is the innovator of code division multiple access technology, a key communications standard used in wireless networks. The company has leveraged its CDMA expertise into the semiconductor market, where the firm is a key supplier of chips to Read more

Bulls Say

In order for a mobile phone to function on a CDMA-based network, as used by Verizon Wireless VZ, Sprint S, and others, handset makers must pay royalties to Qualcomm.

All 3G wireless networks are CDMA-based. As wireless carriers upgrade to 3G in order to provide greater bandwidth, Qualcomm should see a boost in royalty revenue.

Snapdragon is a low-power processor chip aimed at the smartphone and netbook markets, two growing segments in technology.

In addition to its extensive IP portfolio, Qualcomm is one of the world's largest chipmakers and a key supplier to wireless handset makers. Read more

Bears Say

Due to the firm's many licensing agreements and stranglehold on 3G patents, Qualcomm will probably need to defend itself in various legal actions from time to time.

After the adoption of 3G networks, Qualcomm should see a drop in royalty rates, as the firm expects to receive 3.25% of the price of 4G-compatible phones, versus the 3%-5% earned on the price of 3G CDMA-compatible phones.

Qualcomm competes with other large chipmakers, such as Texas Instruments, in the wireless chip industry.

The company has invested significant R&D in a host of new business lines and applications, and it is unclear whether these products will succeed in the market place. Read more

Strategy

Qualcomm's strategy is to defend its position as the premier wireless technology leader. The company will continue to promote the implementation of 3G technologies while developing patents to increase Read more

Management

Paul Jacobs, the son of Qualcomm cofounder and former chairman Irwin Mark Jacobs, has served as CEO since July 2005. Paul also took over the chairman role in March 2009 when his father stepped down. Before taking on the CEO and chairman roles, Paul Read more

Profile

Qualcomm develops and licenses wireless technology and manufactures semiconductors for mobile phones. The company's key patents revolve around CDMA technology, which is Read more

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