Playing the Qualcomm Rebounce

Qualcomm’s shares are due for a bounce..

Playing The Qualcomm Re-Bounce – Seeking Alpha

Playing The Qualcomm Re-Bounce
July 16, 2012 | 2 comments | about: QCOM

The shares of Qualcomm (QCOM) have lost significant ground since touching a high of $68 at the end of April to $55 now. We think that sell-off is a little overdone.

Qualcomm designs, develops, manufactures, and markets digital telecommunications products and services. It operates in four segments: Qualcomm CDMA Technologies (QCT), Qualcomm Technology Licensing (QTL), Qualcomm Wireless and Internet (QWI), and Qualcomm Strategic Initiatives (QSI).

Some key metrics:

Market cap $94.25B
Revenue: $14.96B (fiscal year 2011, which runs until the end of September) [CNBC]
Cash: $15B (end of March 2012) [CNBC]
Debt $1.18B
Profit margin 45% (last quarter) [ycharts]
Cash flow from operations has been solidly positive, even in 2008 ($3.58B)

A very sound balance sheet, good cash and profits generation, solid revenue and earnings growth and 30-50% profit margins, these are all manifestations of a very well run company that is solidly entrenched in its markets and industries. Indeed.

Qualcomm claims to have come up with a new open business model. Rather than licensing individual patents, it has licensed its whole portfolio in order to create an ecosystem and accelerate technology acceptance and adoption (one can read more about that in a company study (pdf) here). [Read on here]