Qualcomm (QCOM)

What he likes most about this is that it has a 65% market share in its space, chipsets for mobile devices. Two thirds of all mobile phones globally use their chipsets. They are very innovative. Have a new chip called Snapdragon. It is now a question of how many circuits and lines you can get close together. Stock is down because they are having trouble with payments in China, which he thinks can be cured. Have also had some investigations in Europe and other markets about being anticompetitive, which is going to happen when you have a 65% market share. Sales of smart phones keep increasing. Growing its dividend. Quite inexpensive and a great entry point. Dividend yield of 2.51%.

Thinks this has been having a little bit of trouble with market share. He doesn’t like the stock profile right now. Chart is showing lower highs and lower lows. This could get back down into the $58 range before long. The likely direction is down.

Earnings the other day were okay, but they warned about the second half of the year. They had this issue with royalties in China which they have sorted out. They are in the sweet spot of the cell phone business. There were little bumps in the road that hurt the share price so this is why you should buy it now. They are buying back shares and have a nice dividend yield that they will increase.

He doesn’t like to own a name where there are all kinds of exogenous factors that he can’t control. When he heard that China was taking this company to task, it looked like it was going to be a bit of a question mark for a while. Also, it hadn’t moved for quite a while. The most recent issue is that Samsung is not going to use their chipset, but Apple is. Because of this, there will be a tug-of-war.

There are 2 issues on this. The antitrust problem in China and the Samsung decision to not use their chipsets in their next line of smart phones. Feels these 2 things will put a little bit of a cloud over the stock and keep it from moving up materially in the near term. Longer-term valuations are pretty attractive. The PE is near 10 year lows and the PEG ratio is at 1.0.

A leader in their industry. Well developed road map on the technology side. Can grow EPS by over 10% in the next years. Lots of cash and they will be buying back shares and increasing the dividend. It is effectively a royalty company and China has hurt them. Over the long term they should do very well, however.

Having trouble, not only with the Chinese license situation, but also with the Chinese government which is saying they have a monopoly. They are trying to weaken them. It’s a natural thing for governments to do. This is something that you just have to build into the normal course. Usually they negotiate their way out of these situations and it costs them some money, but long-term, the benefit of this company is that they do have a stranglehold on the chipset market for the smart phone market. This market, for the next 5-10 years, is expected to grow 15%-17% per year. A good story. The future is a little cloudy and this is why he diversifies.

A great company and not overly expensive. Moved a lot of his holdings into Apple (AAPL-Q), which he believed was going to take a much greater share in high-end smart phone growth. QUALCOMM puts a wireless chip into the Apple phone and a full processor chip into all the other phones. On top of the China issue on intellectual property rights, he also thought there was going to be an IOS market share shift. (See Top Picks.)

Anything connected to 3G or 4G networks, they get a royalty on it, which is why she owns the stock despite the troubles it is having on collecting royalties in China. The Chinese situation is why the stock has been flat year-over-year. They have gone through this before and they have ways of auditing, checking and back checking. Also, part of it has to do with the investigation they are under by the Chinese antitrust organization. This has been a big overhang on the stock the last couple of quarters.

(A Top Pick Dec 23/13. Up 3.12%.) The Chinese thought they were making too much money, which torpedoed the stock for a while. A great company. In all the right places. There is really good potential growth here. Also, pays a dividend.

When the last quarter came out, his company sat around the table and argued about it, and came to the consensus that they were going to continue to Hold the stock. The licenses for 3G and 4G are not being properly reported from China, and it looks like this company has to give a little. Thinks their dispute with China will be settled. Have a huge balance sheet, and will probably have to pay some fines. Once they get through that, big things are in store for this company. Have amazing technology and recently announced they are getting into the server market to compete with Intel and Hewlett-Packard. Stock is very cheap at ex-cash at 9 or 10 times earnings.

13 times earnings. They are facing some issues in China with royalties and they are in with an antitrust case and hopefully this will work out. They are in the high growth area of the tech business. Great roadmap for down the road. 8-10% revenue and earnings growth. They are buying back shares and increasing their dividend soon. They were hurt in the short term, but will benefit from it being solved further out.

They sell communication chips across the industry. Almost any smart phone built globally has a Qualcomm chip in it. Also, have a lot of products going into areas such as wearables and the higher growth areas. The biggest problem recently has been with what they sell in China and getting their royalties. Stock continues to have a decent growth rate. Yield of 2.37%.

They reset their expectations in China because they are having difficulty collecting the royalties. Indicated the total adjustable market is growing at 15% plus, but this company is now guiding to 3%-4%. They are under regulatory scrutiny for anti-competition practices in China as well. Emerging markets is really the growth market for smart phones now, and the average selling prices are much lower. Earnings visibility is very low. She would go somewhere else where there is more visibility of growth.

Typically if you owned it for a long time, with the secular trend being good, this company is a beneficiary. The thesis has not changed, so it is just a quarterly blip.