In a Mobile-Tech War, the Only Sure Winner is the Arms Maker (QCOM, AAPL, MSFT, GOOG)
Being an investor can be maddening at times, since you're largely at the mercy of the media. Take the four-way battle between Google Inc. (NASDAQ:GOOG), Apple Inc. (NASDAQ:AAPL), Samsung, and most recently Microsoft Corporation (NASDAQ:MSFT) as an example. Financial news sources pose these three companies as the only way to play the mobile explosion, and then handicap which one of them is the best bet. Meanwhile, very little is said about QUALCOMM, Inc. (NASDAQ:QCOM), which - ironically - is the one way to play the advent of smartphones with little to no risk; QUALCOMM supplies Apple, Samsung, Google, and now Microsoft with many of the 'guts' that go inside their devices. Even more compelling to investors: QCOM shares have been much more consistently-reliable than stocks of the other three companies in question.
That's not to say it's been the top performer in this space. Apple still technically holds that title. Of course, Apple also holds the title for the biggest disappointment of 2012, with shares sliding lower by 30%. Since mid-2010 though, AAPL and QUALCOMM shares are neck and neck in the performance race, while both stocks have trounced the 60% gain from GOOG, and the 8.5% gain from Microsoft shares.
The proof of the pudding, however, is in the numbers. QCOM has 'em.
Like most other companies during and immediately after the recession, QUALCOMM struggled. Revenue has grown from 2009's $10.38 billion to last year's $19.1 billion - a near doubling of revenue in just three years. Income has grown from $1.59 billion to $6.1 billion for the same timeframe.
Apple has put up similar growth numbers, though it's Apple.... the company with the iPhone and the iPad. Google has performed similarly well, also on the heels of mobile's advent. Indeed, you could say that all three - even though competitors in some senses - have all pulled one another up the mobile hill (of money).
The key to this consistent success, however, is a customer-centric company.
Critics of QUALCOMM - and there are plenty of them - are quick to point out that NVIDIA (NASDAQ:NVDA) is nipping at QUALCOMM's heels. In fact, NVIDIA actually won a deal with Google to supply key components for the Nexus 7 tablet. That's not enough evidence to say QCOM shareholders are in trouble though; the company has a stellar reputation for quality products, and its customers won't be too quick to steer clear of a supply relationship that has worked well. Besides, QUALCOMM does as much R&D as anybody, and does it as well as anybody, with new products.
Two of those new products are the SnapDragon 600 and the SnapDragon 800, which will take dead aim an NVIDIA's efforts to take the lead in the tablet-processor space. The upside is, QCOM only controls a tiny fraction (less than 5%) of the tablet processor space right now, giving it plenty of room to grow in the foreseeable future as tablets continue to proliferate.
The bottom line? Nobody wins a war except the arms-makers. QCOM is the arms maker here.
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James E. Brumley is a paid contributor of the SmallCap Network. James E. Brumley's personal holdings should be disclosed above. You can also view SmallCap Network's complete disclaimer and disclosure.
Do NOT buy or sell AAPL, QCOM, MSFT or GOOG until you have read everything.
SmallCap Network provides comprehensive research and opinions on AAPL, QCOM, MSFT and GOOG. |
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| Date: | May 21, 2013 | |
| Price: | Free | |
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