Qualcomm Set to Shine in 2013

NEW YORK ( TheStreet) - Qualcomm ( QCOM) looks set to shine in 2013 after delivering an upbeat outlook at the company's annual analyst event on Thursday.

The chip maker, widely regarded as one of the key beneficiaries of the push to high-speed LTE networks, gave a bullish outlook for the coming years, further cementing its status as one of tech's brightest stars.

Recent weeks have seen a host of big-name tech firms strike a cautious tone about the coming months, with Intel ( INTC) citing weak demand and Texas Instruments ( TXN) delivering weaker-than-expected guidance and announcing layoffs.

Qualcomm, however, shrugged off the spending headwinds that have characterized this tech earnings season, projecting 20% to 26% revenue growth in fiscal 2013 and non-GAAP operating income growth between 14% and 21%.

Clearly, there's a big market opportunity ahead for the component maker and key Apple ( AAPL) partner. On Thursday, for example, Qualcomm said that it's looking for a double-digit Compound Annual Growth Rate (CAGR) on revenue and EPS over the next five years.

The booming demand for smartphones and tablets, combined with lucrative opportunities in emerging markets and the expansion of high-speed networks, put Qualcomm in a great position.

"We continue to be buyers with 2013 catalysts including China Mobile, new products, iPhone and a secularly growing smartphone market," wrote Sterne Agee analyst Vijay Rakesh, in a note released on Friday. Some 65% of China Unicom's phones contain Qualcomm processors, added the analyst, noting that China Mobile presents a big opportunity for the company in the first half of next year.

Qualcomm's Snapdragon processors already support a wide flavor of 3G and 4G technologies, something that's key in countries such as China, where a wide range of networks are in use. The next version of Qualcomm's Snapdragon processors will be introduced in the first quarter of 2013.

The company also continues to ride the Apple wave. Qualcomm provides a power management chip, an LTE modem and an RF Transceiver for the new iPhone 5, continuing its strong partnership with the tech giant. Other Qualcomm customers include Samsung, Nokia ( NOK), LG and HTC.

The chip maker discussed the booming smartphone and tablet space during its annual analyst meeting, describing a total market of 5 billion cumulative smartphone unit sales between 2012 and 2016.

Analyst sentiment towards the company was overwhelmingly positive on Friday.

"We believe Qualcomm is well positioned to post strong earnings growth in F2013 and beyond due to stable royalty rates, strong market share for integrated chipsets, and strong growth of 3G devices in emerging markets," wrote Canaccord Genuity analyst Mike Walkley, in a note.

"Post Qualcomm's analyst meeting we reiterate our outperform rating," wrote Credit Suisse ( CS) analyst Kulbinder Garcha. "We see solid fundamentals ahead with growth being driven by smartphone/tablet adoption and resilient pricing due to a mix shift to high-end smartphones driving long-term double-digit EPS growth."

Qualcomm, which overhauled its corporate structure earlier this year in an attempt to speed up product delivery and protect patents, also discussed the opportunities around Small Cell technology during its analyst event.

Similar to Femto Cell, Small Cell refers to a low-power radio technology which can be deployed wherever users need to boost their data capacities. Qualcomm says that the same chips it sells to phone manufacturers can be used within Small Cell devices, potentially opening the door to a lucrative new revenue stream.

"Qualcomm was optimistic on exposure to small cells," wrote Lazard Capital Markets analyst Ian Ing, in a note released on Friday. "Units could become material enough to directly impact both licensing and chipsets."

Qualcomm shares rose 0.41% to $61.53 during Friday trading.

-- Written by James Rogers in New York.

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