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Rod Hall Is Disappointed With Qulacomm

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  • The share price of QUALCOMM, Inc. (NASDAQ: QCOM) has dipped 35.4 percent year-to-date, hitting a low of $46.83 on Monday.
  • JPMorgan’s Rod Hall has maintained a Neutral rating on the company.
  • Hall stated that the results of the company’s strategic review were disappointing, with no clarity on how the key strategic issues at QCT were going to be addressed. The FQ1 guidance was also raised.

Analyst Rod Hall had expected the board to decide not to spin out QCT, which was confirmed. “We continue to believe that adding significantly more scale to the chip business while diversifying away from mobile is the way to go,” he mentioned.

Related Link: Why Qualcomm Never Broke Up

Regarding M&A, management said that it did not believe that there was any need to “lever up the balance sheet,” while saying that QCT already had enough scale.

“Both responses suggest the company may not understand the degree to which investors believe the company needs to scale QCT up and diversify away from mobile devices,” Hall stated, noting that costs were still too high, given the overlap between QCT and CSR.

Qualcomm also raised its F1Q16 EPS guidance “at or modestly above the high end” of the previous Non-GAAP and GAAP EPS guidance ranges.

“The company said that better-than-expected 3G/4G ASPs and shipments and cost actions taken so far are also helping guidance,” according to the JPMorgan report.

Qualcomm also reiterated its target of a $1.4 billion reduction in spending, while realizing over $600 million in savings in FY16. The company also reaffirmed its QCT EBT margin target of 16 percent in F4Q16.

Latest Ratings for QCOM

Jan 2018NomuraUpgradesNeutralBuy
Nov 2017Stifel NicolausDowngradesBuyHold
Nov 2017Canaccord GenuityMaintainsBuy

View More Analyst Ratings for QCOM
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Posted-In: JPMorgan Rod HallAnalyst Color Reiteration Analyst Ratings


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