Qualcomm (QCOM, Financial) has always been one of the favorite tech stocks for many investors. The company benefits primarily from the mobile device market and also from the gamut of patents that fetches recurring revenue as license fees from the third party, for the company. The two revenue streams of the company is QCT ( Qualcomm CDMA Technologies) and QTL (Qualcomm Technology Licenses).
Quarter Overview
The company recently declared it second quarter result for fiscal 2015 and was quite strong. The revenues were up 8% year over year, to record $6.9 billion as compared to $6.4 billion in the same quarter last year.
Despite foreign exchange headwind, the company recorded 17% year-over-year growth in QTL and 4% year over year growth in QCL.
Journey Ahead
The company is also focusing on an effective supply chain management that would be catalytic in cost control and have a positive impact on the bottom line.
The roadmap of the company is very convincing based on the response that its getting from their OEM’s. This is also supported by its leadership in modem. This makes it look good
Acquisition for stronger portfolio
I n the past the company had made some major acquisition to strengthen its product portfolio; it acquired Atheros to add network products to its portfolio. To add more weight to it portfolio the company announced it interest to acquire CSR(Cambridge Silicon Radio) for $2.5 billion. The acquisition is anticipated to close by end of this year. CSR is a market leader in Bluetooth technology for machine-to-machine communication. CSR is also growing in wearable devices and automobile which again has a huge market size and will leverage Qualcomm’s revenue growth in future. Qualcomm also has a strong belief that with the product portfolio of CSR and its leadership in Bluetooth, Bluetooth Smart and audio processing this will enable it to have a stronger grip of IoT (Internet-of-Things) market. As per research companies the Industrial IoT market is anticipated to reach $319.62 billion by 2020 and attain a CAGR of 8.15% from 2014 to 2020
Conclusion
The company has numerous opportunities that can influence the growth of both its chip manufacturing business and also revenues from patents. Qualcomm’ benefits from its dual revenue stream of its own products and revenue from patent license fees. With such and revenue stream, the company can always benefit in future and can continue to impress its investors.
The investors of the company also benefit from the dividends which now features around 3% yield, which is quite impressive. Considering the revenue streams and the stock yields, the company will always impress its investors.
