Saturday, November 19, 2011

Qualcomm (QCOM) 2011 Review

Qualcomm Inc (QCOM) develops, markets and licenses cutting edge integrated circuits used primarily in wireless applications, provides data and positioning services for transportation applications, develops content management technologies and provides a platform for wireless application development.

QCOM has grown profits at a 20%+ annual rate over the last 10 years; and has raised its dividend per share from an initial $.09 in 2003 to $.81 in 2011. It has done this while earning a 15%+ return on equity. The company future appears equally promising as a result of:

(1) recent stabilization in pricing,

(2) the strong worldwide demand for high end mobile devices which utilize QCOM’s technology, augmented by its successful diversification into new sectors such as mobile computing, mobile media and mobile banking,,

(3) improved outlook in rapidly expanding markets like China, India and Vietnam,

(4) several large wireless operators are upgrading their networks using QCOM technology,

(5) QCOM’s next generation Snapdragon platform is gaining traction among leading smart phone and notebook developers.

The biggest negative for QCOM is rapidly growing R&D expenses.

The company is rated A by Value Line, has no debt but a huge cash position and its stock yields 1.6%.

Statistical Summary

Stock Yield Dividend Growth Rate Payout Ratio # Increases Since 2001
QCOM 1.6% 7% 27% 8*
IND 1.1 7** 20 NA

Debt/Equity ROE EPS Down Since 2001 Net Margin Value Line Rating
QCOM 0% 17% 3 31% A
IND 12 15 NA 9 NA

*QCOM has paid a dividend for only 8 years
**most companies in QCOM industry do not pay a dividend


Note: QCOM stock made steady progress off its November 2008 low (yes, it wasn’t March 2009), quickly surpassing the down trend off its August 2008 high (red line) and the November 2008 trading high (green line). Long term the stock is in a trading range (neither boundary fits on the chart). Intermediate term, it is an up trend; the purple line is the lower boundary. Short term it is also in an up trend (brown lines). The wiggly blue lines are Bollinger Bands. The Dividend Growth and Aggressive Growth Portfolios own 75% positions in QCOM. Shares would be Added at $12; the lower boundary of its Sell Half Range is $86.