The Qualcomm File
Business: Developer, producer, and licenser of wireless communications technology
1999 Revenue: $2.45 billion
1999 Earnings Per Share: 31 cents
2000 Estimated Revenue Growth: 12%
5-year Annualized EPS Growth: 64.9%
52-Week Range: $51.50 - $200
Percentage Change from Jan. 1: -65%
Market Cap: $46.8 billion
P/E Multiple: 61
Shares Outstanding: 745.1 million
If you're the prom queen one year, the next step you take is down off the pedestal.
understands this feeling all too well. The San Diego-based company, a leader in mobile-communication technology, was the market's darling in 1999, rising a sick 2,619%. But for Wall Street it was apparently more of a crush than true love, as the stock has tumbled 66% so far this year.
Whether you got in early, late or haven't yet touched the stock, the moonshot and subsequent freefall have eclipsed anything that's been going on with the company's business. Since Qualcomm turned in its quarterly report card on earnings Thursday, this week's expanded
Stock in the Spotlight
examines the company's numbers, recent business moves and which professionals think the stock is worth a look.
The queen has lost some luster this year, but its earnings put it in good graces with Wall Street. Qualcomm posted fiscal fourth-quarter earnings of 25 cents a share, beating lowered estimates by a penny. The company also posted revenue of $635 million, an 11% decline from the year-earlier quarter. But the fact that the company beat estimates -- something some investors feared it wouldn't do -- placated the Street and sent the stock up 12% Friday.
Regarding Qualcomm's business operations, its relationship with the Asian tigers has played like a soap opera recently, matching on-again, off-again hopes in South Korea with temptations of large-scale licensing contracts in China. Should these situations play out in the best interest of Qualcomm, it could soon regain its dominance in these markets with the production and licensing of its mobile-phone chip CDMA technology. CDMA is one of three basic mobile communications platforms, competing for uncertain future market dominance.
But the real rough and tumble for the company comes in the form of its shares. Anyone who has been holding on to them for a while has no doubt questioned this themselves. With last year's skyrocketing performance a distant memory, the stock extended its year-long slide into the first half of this week, dropping another 18%. The earnings, posted after the market's close Thursday, turned that around: In after-hours trading Thursday, the stock rose 8.4% and continued a steady course upward Friday.
It's been a disheartening year for Qualcomm investors, and many may be waiting for the other shoe -- continued revenue weakness, increased competition, dwindling stock price -- to drop. Of course, the mutual funds listed below hope that shoe becomes a glass slipper again.
Qualcomm to Postpone CDMA Business IPO (11/2/00): Qualcomm will postpone consideration of the initial public offering of its proposed integrated circuits and system software business spinoff until January... more
Peering Into Qualcomm's Darkening Crystal Ball (7/18/00): Qualcomm's partying days are in the past, for now. When the San Diego-based cell-phone company reports fiscal third-quarter results Wednesday, Wall Street will be less interested in its numbers than... more
Update: Qualcomm Falls After South Korean Firms Reject Its Technology (7/7/00): Scorning Qualcomm and the system it developed, the three largest mobile-phone operators in South Korea have decided to use an alternate standard, developed by Nokia and Ericsson... more
Qualcomm Trying to Scale Great Wall in China, Korea (6/5/00): LONDON -- The connection between Qualcomm and its shareholders has been anything but clear over the past few weeks, as concerns about the company's future growth have driven the price 66% from its January high... more