Skip to main content

Market Overview

Structural Headwinds, Apple Feud Weigh On Qualcomm's Outlook

Share:
Structural Headwinds, Apple Feud Weigh On Qualcomm's Outlook

QUALCOMM, Inc. (NASDAQ: QCOM)'s fiscal second-quarter top-
and bottom-line beat is taking a back-seat to the company's multiple legal disputes, most notably with Apple Inc. (NASDAQ: AAPL).

Oppenheimer's Rick Schafer commented in a research report that Qualcomm's receivables balance reflects the approximate $1 billion, which it believes is owed to the company from Apple's suppliers. However, the analyst stated it is unclear if or even when these payments will be received.

In fact, the analyst noted that the high end of Qualcomm's fiscal third-quarter guidance implies it receives payment in full, the low-end of the guidance "doesn't account for the possibility of no payment."

Qualcomm Needs Better Diversification

Aside from Qualcomm's legal uncertainties, the analyst found other areas of concern for investors. Specifically, the company reported deliveries of 179 million MSM chips in the second quarter, which represent a 5 percent drop from a year ago after the company lost baseband share in the iPhone 7. While the company could see a lift in its June numbers from the Galaxy S8, further iPhone 8 share loss could present additional headwinds in the back-half of 2017.

Shafer also argued that Qualcomm's legal disputes reinforce the importance of diversification. While the acquisition of NXP Semiconductors does pose "above-average integration risk" the deal could be 30 percent-plus accretive in 2018.

However, this doesn't take away from Qualcomm's near-term legal headwinds, so the analyst is recommending investors remain on the sidelines.

Shares remain Perform rated with no assigned price target.

Related Links:

Qualcomm's Apple Quarrel Likely To Remain Overhang Despite Strong Quarter

Qualcomm Downgraded Amid iPhone 8 Share Loss

Latest Ratings for AAPL

DateFirmActionFromTo
Feb 2021RBC CapitalAssumesOutperform
Jan 2021DA DavidsonMaintainsBuy
Jan 2021Deutsche BankMaintainsBuy

View More Analyst Ratings for AAPL
View the Latest Analyst Ratings

 

Related Articles (AAPL + QCOM)

View Comments and Join the Discussion!

Posted-In: Analyst Color Earnings News Guidance Reiteration Analyst Ratings Movers Tech Best of Benzinga

Latest Ratings

StockFirmActionPT
NIUDaiwa CapitalInitiates Coverage On41.5
QMCONorthland Capital MarketsInitiates Coverage On12.0
IBKRJefferiesInitiates Coverage On89.0
MRETFTD SecuritiesDowngrades18.5
SWKSGoldman SachsDowngrades135.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com