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 Teed Up for Verizon iPhone

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Corrected. Qualcomm will collect a full 3G royalty on 4G phones that have 3G capability. The original version of this story mistakenly said the rate would be a mix of 4G and 3G rates.

NEW YORK ( TheStreet) -- Qualcomm (QCOM - Get Report) bulls have gotten pretty jazzed while awaiting the wireless shop's earnings and outlook that hit after the bell Wednesday.

The excitement around Qualcomm is a simple three-part story: The surging sales of smartphones in the fourth quarter, the big supply win for Apple's (AAPL - Get Report) CDMA ( Verizon (VZ - Get Report)) iPhone and the huge opportunity to supply 4G chips to the iPhone 5.

While the rosy scenario helped lift Qualcomm shares to a two-year high a week ago, concerns about Qualcomm's outlook have since tempered the enthusiasm a bit this week.

The risks to Qualcomm's success also come in threes. Qualcomm's Snapdragon processor for mobile devices faces rising competition from Samsung's Hummingbird and Nvidia (NVDA - Get Report) Tegra chips. Long-time partner Motorola (MMI) opted to use its own 4G chip in its Xoom tablet. And royalty rates from Qualcomm's patent licensing business are decreasing.

For the December quarter, analysts expect Qualcomm to post adjusted earnings of 72 cents a share, up a dime from year-ago levels, according to Yahoo! Finance. And sales are expected to be $3.2 billion, a sweet 20% year-over-year increase.

Calling for a classic beat and raise performance tonight, Charter Equity Research analyst Ed Snyder said Qualcomm's is in a very strong position. "The lack of a strong competitor in 3G baseband has handed Qualcomm a large and growing share of the smartphone business," Snyder wrote in a research note Friday.

But on the chip side of Qualcomm's business, some analysts remain cautious. Qualcomm enjoys a dominance of the 3G wireless chip market, but the tables turn significantly in 4G. Qualcomm's royalty rate in LTE or 4G is 3.25%, well down from 5% in 3G. But as long as 4G phones are sold with 3G capability, Qualcomm will continue to collect the higher rate.

The upshot: the smartphone boom could one day turn into a bust for Qualcomm -- but not anytime soon.

--Written by Scott Moritz in New York.

>To contact this writer, click here: Scott Moritz, or email:

To follow Scott on Twitter, go to

>To send a tip, email:

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!
AAPL $123.25 0.00%
NVDA $21.38 0.00%
QCOM $67.02 0.00%
VZ $48.56 0.00%
FB $83.30 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