QUALCOMM, Inc (NASDAQ:QCOM) spreads the “snapdragon” fire

Posted by Lynn Eisler July 23, 2013 0 Comment 2783 views

QUALCOMM, Inc (NASDAQ:QCOM) has come under the investor radar even as the market saw a downtrend in the smartphone market. The company supplies apps processors and modems for tablets and smartphones. Adding fuel to the fire was the fact that come 2014, QCOM will see major competition in the high end apps and LTE modems segment. The shares are being hit by a chain of downgrades and investor frustration is becoming very evident.

The company seems to have gained a little bit of its attraction quotient owing to the fact that it had a small victory with the soon-to-be-launched Samsung Galaxy Mini and Lee Cooperman’s presentation at the “Delivering Alpha” conference.

What’s in the tablet?

QCOM’s Snapdragon S4 chip series have been doing famously well in smartphones but haven’t gained any ground in the tablet segment so far. There is absolutely no doubt about the fact that the Snapdragon 800 and 600 processors impress on all fronts. In the second half of 2013, based on the performance and power of these processors, Qualcomm should be able to gain some momentum.

The company will have to brace itself for the stiff competition that it is going to be facing from Nvidia’s “Tegra 4” and Intel’s “Bay”. Also, Texas instruments goodbye to this pace is good news for the company.

Tablets going cheap

While there is a definite cheap tablet war heating up in the U.S, it pales in comparison to the tidal wave of below $50 tablets that has been unleashed in the Chinese market. The only way that local companies are managing this is by creating designs that are “good enough” and which sell for close-to-nothing in comparison to the high-end Qualcomm and Nvidia designs.

Even a biggie like HP can’t keep away from the potential that emerging markets like China have. In 2011, the company sold its TouchPad tablet at a starting price of $500 with a Qualcomm design. Later, it created its Slate 7, the budget priced tablet based on a design from Rockchip, the Chinese chip designer. And so, ironically even though the tablet market seems to be booming, it doesn’t really do much in terms of profitability for high-end chip companies like Qualcomm in these markets.

About Lynn Eisler

Lynn Eisler is a national news reporter focusing on economic issues, data analysis and the financial health of state and local governments. Lynn has been honored with the H.L. Mencken Award for Investigative Reporting, the Champion of Justice Award for reporting on the drug war, and the John Hancock Award for business reporting. Lynn was also a Knight Medical School Fellow at the University of Michigan.

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