Qualcomm (QCOM)

He sold it earlier because they had troubles with China saying they were a monopoly. This was a big red flag for him. They were good with what they did and owned 96% of the LTE chip market so what where they going to do.

She would have concerns about the royalty side. Problems have already surfaced. Had difficulty in collecting royalties in China. There is now an agreement in place, but it is getting that implemented and enforcing it. It now sounds like they are having some issues in Korea. They should be compensated for their royalties, but it is really the rate. The average selling prices on smart phones are slowly declining and this is what their royalty rates are based on. There isn’t a lot of visibility on their earnings front. Trading at a pretty low multiple, but earnings are not growing.

Has been one real dog of a stock in this past year. This is what happens when you screen for stocks and find one that is cheap and cheap on earnings, and you end up in value trap. Bought the stock in 2013 and it has gone nowhere, but down. The problem is that they can’t collect on royalties in Asia, and are being attacked on all fronts in their chip business. He is still deciding what to do with the stock.

It has been a difficult story. Pays a nice dividend and has a nice balance sheet. It is not an expensive stock. It is a tough call, however. China is a bit of an issue for them. It has not been executing well over the last couple of quarters.

He does not know what is going to happen and that is a reason enough not to hold it. He sold in Feb or March of this year. He was uneasy with the relations with China. Operationally they had the whole LTE market so what can they do? How does it get better?

(Market Call Minute) Prefers AVGO-Q.

Continues to miss analysts’ expectations and he is glad that there is an activist in there to shake things up. They continue to generate a lot of free cash flow. There are concerns of legal issues in China. Have wonderful products and wonderful assets, but it is not being managed properly. A more reasonable level for the stock would be $55-$60, and if they are able to execute on some of the issues they are working with the activist investors, he thinks it could go back to the $80 range.

Had held this, but it was a very disappointing investment. Their problem wasn’t just in Asia where they had trouble having people pay them, but it was when they had a bit of a blip on the chip side, whether it was real or perceived. Competition has affected pricing power and she sold her holdings. Until you see the pricing pressure reversed, the stock is going to have a pretty hard time doing much better.

The great thing about this company is the valuation. The balance sheet is perfect and the company recognizes that they are underperforming. They are trying to put that capital to work by buying back stock and increasing the dividend. Have bought back a lot of stock, but haven’t really meaningfully reduced the shares outstanding, because they give a lot of options. The thesis still makes sense. We are moving to an “Internet of things world” and this company has ridiculously smart technology and ridiculously smart people working there.

(A Top Pick Aug 8/14. Down 12.34%.) There is a big change taking place and this was sort of churning sideways. He felt he had better things to do so he sold his holdings.

There are 3 or 4 big semiconductor companies that are underperforming right now, and this is one of them. They’ve had some difficulties in getting paid in the Chinese market for their IP. There is a lot of change taking place in the sector. The stock has been falling for a year and they are probably going to have negative revenue growth this quarter and probably for the next 4 quarters. Expectation is that earnings are going to be down about 34%.

(Top Pick, July 4 2014 recommended $80.99 now $61.91 down 21.71%) Has been recently hit with the China crash. Qualcomm continues to buy back their shares and has a good dividend yield. Are in a very sweet spot in the chip market (smart phones). Thinks they will do well next year.

He has a model price $100.75, a 51% upside, but still thinks it comes back to $63.81 or $64. He wouldn’t buy it here today, but would see if it holds. It has a negative transit here, and then it is going to $51.

(Top Pick May 29/14, Down 9.98%) China is not as big a problem for them as people think. They have a great road map, but had trouble executing. They have a good dividend and can buy back shares. It is a great story, but there are bumps along the way.

Seems to be one of those companies that is involved in financial engineering. Had been bullish on this for a number of years, but sold his holdings recently. The last round of android phones, iPhones, are not using this company’s chips to the degree they were before. The other big problem is that China almost started reneging on their CDMA devices agreement, which is a big negative. The company announced a massive share buyback when they missed their quarterly numbers, and that bothers him.