July 1, 2009 - Qualcomm Inc. (QCOM-NASDAQ) designs, manufactures, and markets digital wireless telecommunications products and services based on its code division multiple access (CDMA) technology and other technologies. The company operates in four segments: Qualcomm code division multiple access technologies (QCT), Qualcomm Technology Licensing (QTL), Qualcomm Wireless and Internet (QWI), and Qualcomm Strategic Initiatives (QSI).

QTLsegment grants licenses to use portions of its intellectual property portfolio comprising patent rights useful in the manufacture and sale of certain wireless products, such as products implementing cdmaOne, CDMA2000, WCDMA, CDMA TDD, and/or OFDMA standards and their derivatives.

QWI segment sells equipment, software, and services used by transportation and other companies to connect wirelessly with their assets, products, and workforce; and products that operate on the Globalstar low-Earth-orbit satellite-based telecommunications system. It also provides BREW-based products that include user interface, and content delivery and management products and services for the wireless industry; QChat that enables instantaneous push-to-talk functionality on CDMA-based wireless devices; development, hardware, and analytical expertise involving wireless communications technologies to United States government agencies; and an application embedded on select wireless devices, which enables financial institutions and merchants to deliver branded services to consumers through the mobile devices.

QSI segment makes strategic investments to promote the worldwide adoption of CDMA-based products and services. The company was founded in 1985 and is based in San Diego, California.

Qualcomm has been mired in litigation with Broadcom over patent infringement for quite a while. That's all over now. It's been settled with all patent infringement claims by Broadcom on Qualcomm dismissed and no change to any Qualcomm licensing agreements. But Qualcomm will pay Broadcom $891 million over the next 4 years, in cash. $200 million was paid in the June quarter. There was a 45 cents a share settlement charge taken in the March quarter.

Perhaps the biggest contributor to a brighter future is Qualcomm's embedded chipsets that provide mobile 3G Internet connecitivity for notebook computers and other consumer electronic devices. Qualcomm has its own new notebook computer coming in September called the Smartbook. It will be a direct competitor for the notebook and has the ability to connect with any network anywhere.

Earnings will dip this year. In 2008, they were $2.25. This year, the consensus from 11 analysts following the company is for $1.80. Then in 2010, they see $2.40. Second quarter results will be announced on July 22. Expect 53 cents a share, down slightly from 55 cents of a year ago in the same period. In the third quarter, it should be another 53 cents, down from 63 cents in the same period last year. Over the next 5 years, analysts predict annual growth in earnings of 13.35%.

Revenues look to be smaller this year as well. Analysts forecast $10.38 billion, down 6.7% from $11.13 billion last year. Next year, they expect growth of 12.3% to $11.66 billion.

More numbers: Market cap is $75.34 billion. Trailing P/E is 45 but Forward p/e is 19. Price to Book is 4.37. Operating margin in the last 12 months was 33% while Profit margin was 15.17%. Total cash is $9.41 billion for $5.69 a share. Total debt is tiny at $164 million. Current ration is 5. Book Value is $10.35. There's an annual dividend of 68 cents for a yield of 1.5%.

The stock took a drubbing late last year, along with the rest of the market. It hit $28.20 before starting its current rally. It's almost 62% above the lows as of this writing. That's a good bounce. But the stock is top quality and appears to be back on track to deliver strong profits, even in a bad economy (with the exception of this year). While it's still somewhat expensive, it's a stock that bears following and if it offers a better entry point, should be considered by most investors.

Company Web site: www.qualcomm.com

- Ted Allrich