Qualcomm: The Other Apple
Qualcomm (NASDAQ:QCOM) will report second-quarter earnings after the bell on Wednesday. Many are expecting solid earnings given that Qualcomm stands to benefit from the success of Apple (NASDAQ:AAPL) and Samsung products, which run on Qualcomm chips.
Qualcomm is way to play Apple earnings. Given the successful sale numbers for the iPhone and iPad and Qualcomm’s partnership with the technology giant, the San Diego-based company’s fortunes are intimately tied to the smartphone and tablet market. However, analysts note that Qualcomm is more leveraged to smartphone growth.
Qualcomm has well positioned itself for the smartphone boom. AT&T (NYSE:T) and Verizon’s (NYSE:VZ) push for 4G LTE networks will allow Qualcomm to deliver another quarter of solid MSM unit shipments given the growing demand for smartphones and tablets. According to Barclays Capital analyst Jeff Kvaal, Qualcomm’s success this quarter can be attributed to key partners Samsung and Apple, the strong demand for LTE, and Qualcomm’s new dual-core Snapdragon chipset.
The chipmaker has also announced plans to expand into the PC business. The announcement came shortly after Microsoft’s (NASDAQ:MSFT) decision to run Windows 8 with ARM Holdings (NASDAQ:ARMH) chip designs. Qualcomm licenses ARM designs and makes its own proprietary chips.
The company is expected to remain the highest quality business model, with Credit Suisse (NYSE:CS) analyst Kulbinder Garcha reiterating his “outperform” rating and $80 price target. Analysts expect Qualcomm to report earnings of 96 cents per share on $4.84 billion in revenue. This is slightly higher than the first quarter when the chipmaker earned 97 cents per share on $4.68 billion in revenue.
Shares of Qualcomm have gained 22.5 percent this year, making it the king of the 4G. Qualcomm recently raised its dividend, which will be effective on June 20. The company will pay a quarterly dividend of 25 cents a share, up from 21.5 cents a share.