This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Qualcomm Declines Should Continue

By Trefis

Qualcomm (QCOM - Get Report) recently reported earnings, indicating that its royalty rates and chipset prices declined faster than we had expected. We've updated the Trefis price estimate for Qualcomm's stock from $43.53 to $41.64 (vs. market of $39.39) to reflect faster future declines in both royalty rates and chipset prices.

Qualcomm's royalty rates on CDMA technology declined more than expected to 3.6% for 2009, down from 4% in 2008. The royalty rate represents the percentage of the average sale price of a CDMA mobile phone, sold by companies like Nokia and Motorola (MOT), which is earned by Qualcomm.

Increases in the number of low-end (low-price) phones and the lower royalty rates associated with them compared with higher-priced smartphones contributed to the recent decline.

Mobile phone companies like Samsung, LG and HTC that pay royalties to Qualcomm and sell large volumes of low-end phones bargain for lower royalty rates due to pressure on their margins from falling mobile-phone prices.

We expect that Qualcomm royalty rates will continue to decline and reach as low as 2.9% by the end of the Trefis forecast period.

Qualcomm's CDMA chipset prices declined more than expected to $18.5 per chip in 2009, down from about $20 in 2008. We believe the declines are attributable to increased competition from chipmakers ST-Ericsson, IFX and Broadcom (BRCM - Get Report) in the 3G chipset market.

We expect that chipset prices will continue to decline and reach as low as $17 by the end of the Trefis forecast period.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
BRCM $42.91 0.00%
QCOM $67.02 0.00%
AAPL $123.25 0.00%
FB $83.30 0.00%
GOOG $548.34 0.00%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs