Qualcomm, Inc. (NASDAQ:QCOM)

CAPS Rating: 4 out of 5

Develops, manufactures and markets digital wireless telecommunications products and services based on their CDMA technology and other technologies.

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Member Avatar TMFEarlyRiser (57.27) Submitted: 5/11/2015 1:16:20 PM : Outperform Start Price: $69.15 QCOM Score: -0.27

Qualcomm has about 25% of its market cap in cash. That's about $17 per share. If you x out the cash, the company is trading at a very low multiple, implying the market expects about zero growth going forward. This is a classic value investment in the sense that Qualcomm is a high-quality company that historically grew very fast and recently growth has ground to a halt. Gross margins are down about 1000 basis points since 2010 and the cash conversion cycle is up meaningfully over the same time frame. So there is no doubt that growth is slowing and the company's moat is shrinking by looking at the decreased pricing power and the decreased negotiating leverage. But there are a few catalysts on the horizon. First the company recently announced a $15 billion buyback. Second, a very successful activist has gotten involved. Third, it has settled an anti-monopolistic investigation in China which means they will finally get paid royalties on over 200 million phones that it is due royalties on. I believe the company is way better than average, yet it trades at a steep discount to the market. It has also pledged to return at least 75% of FCF to investors in the form of buybacks or dividends. The dividend yields about 2.8% and has been increased each year since 2003. Given that this is a classic value investment, the question is will this be a "value trap???" I think the most important questions an investor needs to ask before investing in QCOM are (1) can growth resume and (2) how much has the moat shrunk?

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Member Avatar neilepi (< 20) Submitted: 5/2/2015 6:24:19 AM : Underperform Start Price: $68.75 QCOM Score: -0.27

Losing market share to Samsung and others. Overall market may also come under pressure.

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Member Avatar rscher7253 (< 20) Submitted: 4/26/2015 12:47:57 PM : Underperform Start Price: $68.77 QCOM Score: -0.77

many headwinds

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Member Avatar Hook5351 (52.99) Submitted: 4/20/2015 10:26:28 PM : Outperform Start Price: $68.84 QCOM Score: -0.13

James

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Member Avatar AnsgarJohn (99.33) Submitted: 4/20/2015 6:05:05 PM : Outperform Start Price: $68.84 QCOM Score: -0.13

Graham Defensive screen AAII, PEG 0,65. No Brainer?

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Member Avatar TMFDeej (99.32) Submitted: 4/13/2015 10:40:10 AM : Outperform Start Price: $70.01 QCOM Score: -1.95

This morning at the 13D Monitor’s Active-Passive Investor Summit, the famous activist investor Barry Rosenstein's JANA Partners announced that it has accumulated more than $2 billion dollars worth of stock in QUALCOMM Incorporated (QCOM) and that it is in discussions with the company about ways that it can enhance shareholder value. QCOM's shares are reacting positively to the news, up over 2% in early trading.

As you can see from the above chart, Qualcomm's stock has underperformed the S&P 500 over the past couple of years. JANA believes that it can rectify that and has suggested to the company that it take several actions. The most interesting of which is to spin off QCOM's chipset business, which manufactures chips for mobile phones. JANA believes that separating the division would make it a likely a takeover target for another chipmaker.

Jana has said that it also would like to see Qualcomm increase its share buybacks and change the composition of its board of directors, “introducing new directors with an owner orientation and a focus on operational performance including cost management.” JANA has secretly been having discussions with QCOM for several months and the fruits of its labor are already starting to show. Last month the company announced that it would buy back $15 million shares and boost its dividend.

JANA has experience in getting companies to sell part or all of their operations. In late 2014, JANA was instrumental in getting one of the companies in its portfolio, PetSmart, to sell itself to a group of buyers including the private equity firm BC Partners for a whopping $8.7 billion. Earlier in 2014, JANA orchestrated the sale of another one of its portfolio companies Safeway to privately-owned Albertsons.

While I unfortunately did not own either of those stocks, I personally have experience with some of JANA's activist targets. I owned Oil States International (OSI) when JANA and nother activist investor Greenlight Capital's David Einhorn encouraged the company to spinoff its Civeo Corporation (CVEO) remote site accommodations business. Fortunately, I sold off all of my stake in OSI and most of my position in CVEO before the price of oil fell off of a cliff and caused their share prices to completely collapse.

JANA is also actively involved in a company that I still own in real life, Hertz Global Holdings (HTZ). The playbook is similar there, JANA convinced Hertz to spinoff its lower margin equipment rental business and to buy back a ton of stock.

Qualcomm's stock took a hit recently after word broke that Samsung will not be using its chips in its new critically acclaimed Galaxy S6 phone. Despite that loss of business, I view JANA's involvement with QCOM as a major positive. I am adding the stock to my on-line special situations portfolio today and will keep an eye on it as a potential real money investment.

Jason

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Member Avatar Kimer62 (54.05) Submitted: 3/12/2015 8:43:37 PM : Outperform Start Price: $69.33 QCOM Score: -2.91

Value that has been in a down trend.

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Member Avatar Volke (77.23) Submitted: 3/10/2015 12:34:37 PM : Outperform Start Price: $72.27 QCOM Score: -7.39

Buyback announced + dividend

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Member Avatar mrgekko (51.92) Submitted: 3/10/2015 11:11:40 AM : Outperform Start Price: $73.04 QCOM Score: -7.98

in a hunt for yield/income environment the below has to b attractive to investors. Qualcomm +3.5% premarket after launching a $15B buyback program that will replace a prior program with $2.1B remaining. The company plans to buy back $10B worth of shares within 12 months, on top of a current commitment to return 75% of free cash flow to shareholders. Qualcomm (NASDAQ:QCOM) also raised its quarterly dividend by 14%, increasing it to $0.48 from $0.42 per share.

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Member Avatar AdamGalas (< 20) Submitted: 3/3/2015 1:22:30 AM : Outperform Start Price: $72.01 QCOM Score: -4.19

A Grand Adventure Dividend Holding:

http://boards.fool.com/the-grand-adventure-121197.aspx

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Member Avatar kembs (58.53) Submitted: 2/13/2015 1:16:03 PM : Outperform Start Price: $70.08 QCOM Score: -2.72

new direction - missed the 52 week low 1 1/2 weeks ago but not too late to catch the ride up

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Member Avatar moneyman999 (33.73) Submitted: 2/9/2015 10:08:26 PM : Outperform Start Price: $68.69 QCOM Score: -2.26

%65 of the market,only one way to go ??

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Member Avatar Har1en (99.27) Submitted: 2/8/2015 1:14:31 AM : Outperform Start Price: $67.76 QCOM Score: -1.44

The pace of advancement in the chip industry, particularly around mobile devices continues to befuddle me (in a good way). The advancements and patents that have exploded in the last 20 years have made the world an entirely different place, and Qualcomm doesn't seem to be letting the foot off the gas. If anything, they are as cutting edge as ever, and maybe too much so sometimes.

However, in 10 years, this caps score is going to be through the roof.

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Member Avatar CellBlock9 (89.28) Submitted: 1/31/2015 7:32:46 AM : Outperform Start Price: $62.13 QCOM Score: +5.42

S&P 4 star, MGK, 62.46

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Member Avatar 1mochs1 (< 20) Submitted: 1/26/2015 11:11:50 PM : Outperform Start Price: $71.26 QCOM Score: -7.36

outperform

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Member Avatar js8vv8 (< 20) Submitted: 1/12/2015 11:32:45 AM : Outperform Start Price: $73.57 QCOM Score: -10.39

IP as a business is a high risk prospect everywhere except the US and Europe IMO. Despite this, QCOM can re-focus in the longer run, rely less on royalties. some short term decline would not be a surprise.

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Member Avatar TMFBuild (46.67) Submitted: 1/7/2015 3:38:03 PM : Outperform Start Price: $71.24 QCOM Score: -5.18

http://www.fool.com/investing/general/2015/01/07/why-qualcomm-is-a-hidden-treasure.aspx

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Member Avatar russfischer1013 (95.31) Submitted: 12/7/2014 11:42:13 AM : Underperform Start Price: $72.79 QCOM Score: +7.15

Problems on many fronts.

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Member Avatar TSIF (99.97) Submitted: 11/19/2014 8:30:23 PM : Outperform Start Price: $67.24 QCOM Score: -2.04

Qualcomm's earnings missed in Q4 '14. $1.26 in earnings for the quarter still leaves this stub with a solid P/E. Estimates were up because of Apples good quarter signaling a better quarter for Qualcomm that didn't align. Licensing disagreements in China (50% of their revenue stream) are also impacting the prospects. The 13% selloff may be an opportunity if China comes in line. The CEO seems positive, but he should be, that's his job.

At $7B in income, and 20% plus growth rate, $17B in cash, ($10 per share), buying back $3B a year in stock and paying an increasing dividend of 2.4% , 30% margins, looks pretty good even after a $0.05 miss.

Needs some more investigation, may have a tough time with this one if the S&P continues up, but I think it's a decent play.

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Member Avatar mhmiskin (41.81) Submitted: 11/15/2014 12:23:01 PM : Outperform Start Price: $69.80 QCOM Score: -4.90

They have the technology that the smart phones need.

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