This Day On The Street
Continue to site
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

Don't Panic Over Qualcomm

NEW YORK ( TheStreet) -- The stock market is a lot of things, but one thing that Wall Street will never be accused of is being fair. Consider Texas Instruments (TXN), which just completed its sixth consecutive quarter of deteriorating sales. Somehow, the stock sits near its 52-week high.

Meanwhile, as of Tuesday's close of $66.10, shares of Qualcomm (QCOM - Get Report) are at about the same level since the chip giant reported record revenue for its fiscal second quarter, its second consecutive strong quarter.

The stock failed to gain ground even though the company raised its revenue and earnings estimates for the year for the second straight quarter. The problem may be Wall Street might have expected even better projections.

I've heard rumblings that somehow Qualcomm signaled increased competitive pressure. The Street seems to fear that the company's chipset margins are under pressure.

Granted mobile-device prices are not as stout as they once were after two years of growth, but I wouldn't get carried away yet. And the Street assumes that management won't figure out a way to offset potential weakness in the company's licenses business.

Plus, Qualcomm reported a 24% increase in revenue for its fiscal second quarter even as the overall chip sector was weak during the first three months of the year. Texas Instruments Intel (INTC) and Advanced Micro Devices (AMD) all posted revenue declines.

Qualcomm also maintained its full-year operating margin estimates for its chipset and licensing businesses.

What's more, the recent earnings report from chip designer ARM Holdings (ARMH) should allay fears about the direction of the market. ARM shipped 2.6 billion chips during its most recent quarter, an increase of 35%.

Qualcomm licenses technology from ARM, and so any increase in ARM's business signals stronger demand for Qualcomm's chips. Given that it has raised its estimates, I think Qualcomm's management knows something.
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
Only $9.95
14-Days Free
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
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
QCOM $50.52 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs