Qualcomm Inc. QCOM has joined hands with Chinese fabless semiconductor company, Allwinner Technology, to drive growth of 4G LTE tablets by powering them with its Snapdragon processors.
Allwinner is a leading provider of system solutions in the connected-tablets space. By using Qualcomm’s Snapdragon 410 and 210 processors, Allwinner is looking to provide high-quality 4G LTE-enabled tablets at reasonable prices to customers. Allwinner plans to commercial deploy the tablets in 2015.
Notably, Qualcomm’s Snapdragon 410 and 210 processors extend the company’s 4G LTE capabilities to entry-level smartphones and tablet designs. Backed by a potent blend of features and performance, both the processors are capable of delivering wide-ranging solutions for smart devices and are, at the same time, power efficient.
We believe the extensive deployment of Snapdragon processors within the rapidly growing tablet segment will help drive Qualcomm’s top line higher. Moreover, this is in sync with the company’s plans to further speed up the expansion and rollout of 4G LTE connected gadgets powered by Snapdragon processors.
Meanwhile, Qualcomm’s latest chipsets for WiFi, RF360, multimode 3G and 4G LTE from its flagship Snapdragon platform have been doing extremely well. In the second quarter of fiscal 2015, Qualcomm shipped approximately 233 million CDMA-based MSM chipsets, up 24% year over year. Also, consistent and improving trends in smartphone demand, especially in the emerging countries, particularly bode well for the company’s long-term growth.
However, on a disappointing note, Qualcomm has lowered its financial outlook for fiscal 2015 for the second time taking into account factors like lower volumes from the Snapdragon platform and intensified competition in the Chinese market.
Nevertheless, the collaboration with Allwinner should enable Qualcomm to ride high on the promising Chinese tablet market. We believe, this will ramp up volumes and sales for the company and effectively bolster it in the face of competition.
We note that the current guidance for total revenue in fiscal 2015 is pegged in the range of $25–$27 billion compared with the prior guided $26.3–$28 billion. Non-GAAP EPS is now estimated at $4.60–$5.00, lower than the prior guidance of $4.85–$5.05.
Qualcomm currently carries a Zacks Rank #4 (Sell).
Stocks that Warrant a Look
Better-ranked stocks worth considering in this sector include Juniper Networks, Inc. JNPR, Polycom, Inc. PLCM and Zhone Technologies Inc. ZHNE. All the three stocks sport a Zacks Rank #1 (Strong Buy).
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