QCOM - Embedded Expectations Analysis - 2021 10 12
QUALCOMM Incorporated (QCOM:USA) currently trades near historical averages relative to UAFRS-based (Uniform) earnings, with a 16.8x Uniform P/E. Even at these levels, markets are pricing in bullish expectations for the firm, but management may have concerns about their product mix, revenue growth, and relationship with Apple.Specifically, management may lack confidence in their ability to grow revenues in Q4, sustain gross margin expansion, and meet 5G handset sales volume guidance. In addition, they may have concerns about the sustainability of demand for their technology, the strength of their relationship with Apple, and the sustainability of sales performance of radio frequency (RF) transceivers. Furthermore, management may lack confidence in their ability to maintain strong product mix in the Qualcomm Technology Licensing (QTL) segment and capitalize on growth opportunities in the premium Android market. Finally, they may be exaggerating the potential of the Intel Foundry Services (IFS) partnership and their capacity to gain market share through R&D investment.
Qualcomm is engaged in the development and commercialization of foundational technologies for the wireless industry. The company's segments include: Qualcomm CDMA Technologies, which is a developer and supplier of integrated circuits and system software based on code division multiple access, orthogonal frequency division multiple access and other technologies; Qualcomm Technology Licensing, which grants licenses or otherwise provides rights to use portions of its intellectual property portfolio, which, among other rights, include certain patent rights essential to and/or useful in the manufacture and sale of certain wireless products; and Qualcomm Strategic Initiatives, which makes investments.
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