Qualcomm Turns A $1.5B Profit

[Arachnotronic]

http://files.shareholder.com/downlo...af6-4c2f-a119-2ed09ab39bbf/Q4'13 ER Final.pdf

• Revenues: $6.48 billion, up 33 percent year-over-year (y-o-y) and 4 percent sequentially.
• Operating income: 1 $1.59 billion, up 29 percent y-o-y and down 5 percent sequentially.
• Net income:
$1.50 billion, up 18 percent y-o-y and down 5 percent sequentially.

I think there was an individual on here who claimed that Qualcomm would be making more money than Intel and that's how it would be forevermore.

Guess not.

 

[tyreslol]

How is their patent portfolio generating so much profit? 1.6 bn before taxes for licensing their IP? Crazy...

 

[ShintaiDK]

Its due to modems essentially. Without those, its a company in a completely different shape.

 

[NTMBK]

How is their patent portfolio generating so much profit? 1.6 bn before taxes for licensing their IP? Crazy...

As Shintai said, it's all about the modems. There's a reason they're called Qualcomm.

 

[PliotronX]

They also make the processors in a shitton of phones i.e. Snapdragon which is in most touchscreen Samsungs and when Samsung makes a killing...

 

[krumme]

http://files.shareholder.com/downlo...af6-4c2f-a119-2ed09ab39bbf/Q4'13 ER Final.pdf



I think there was an individual on here who claimed that Qualcomm would be making more money than Intel and that's how it would be forevermore.

Guess not.

So quallcomms performance should be judged by that strawman? Lol.

That is a mighty fine results. Who dont want a balance sheet like that? Damn. Not two words about it.

 

[Khato]

They also make the processors in a shitton of phones i.e. Snapdragon which is in most touchscreen Samsungs and when Samsung makes a killing...

Though I believe the correct way to look at it is that they make processors in order to sell more modems.

 

[dave_the_nerd]

Awesome, so Eudora's making a comeback then?

 

[liahos1]

stock down 5%. this is the first time since 2009 that they have missed sellside consensus estimates on forward guidance. their QCT margins declined 180bps sequentially. the full fiscal year 2014 guidance on revenue was below expectations. showing a sharp deceleration to high single, low double digit growth. the only thing holding up eps for them is their share buyback. not pretty. this market is rapidly commoditizing.

and somehow i dont think 4k smartphones or curved screens going to reignite growth.

 

[Arachnotronic]

So quallcomms performance should be judged by that strawman? Lol.

That is a mighty fine results. Who dont want a balance sheet like that? Damn. Not two words about it.

When Qualcomm's market capitalization is roughly on par with Intel's, it's a good comparison point.

Intel earns twice as much as Qualcomm does, and now Qualcomm's growth has slowed to a crawl.

 

[Fjodor2001]

Though I believe the correct way to look at it is that they make processors in order to sell more modems.

They make App chips (APQ-series), Modem chips (MDM-series) and App+Modem chips (MSM-series).

They do not only make the APQ-series to sell modems. E.g. there are WiFi-only tablets with only APQ and no MDM chip.

 

[Roland00Address]

They also make the processors in a shitton of phones i.e. Snapdragon which is in most touchscreen Samsungs and when Samsung makes a killing...

While I am not disagreeing with this factual statement, the reason why they are in so many phones is due to their modems. Either the modem is integrated in the soc or you get a bundle discount if you buy both the modem and the soc.

Qualcomm is so succesful due to their modems and integration putting as much as possible into a single soc.

This is 3 year old info but here is intels moorestown 5 I mean 2 chip solution to phones. Notice how huge they had to make it.

http://www.anandtech.com/show/3696/...600-series-the-fastest-smartphone-processor/3

Intel had better idle power and faster cpu than anyone on the market at the time but no one used it for it was too complicated with too many chips look at the prototype. Not a single design win what so ever with moorestown. Its successor medfield had a number of design wins less than 10 and none of them major.

And this was a 3g phone which did not need lte which is a seperate chip.

With phones integration especially the modem means more design wins, more design wins means more money.

 

[Khato]

They make App chips (APQ-series), Modem chips (MDM-series) and App+Modem chips (MSM-series).

They do not only make the APQ-series to sell modems. E.g. there are WiFi-only tablets with only APQ and no MDM chip.

And how does that negate the fact that their primary interest is selling more modems? And that either integrating them into the SoC or having them 'work best' with their SoCs is the ideal way to do so?

Note that I'm not claiming they don't care about SoC sales, just that it seems most forget that Qualcomm makes more money off a modem sale than they do an APQ-series SoC sale.

 

[Fjodor2001]

And how does that negate the fact that their primary interest is selling more modems? And that either integrating them into the SoC or having them 'work best' with their SoCs is the ideal way to do so?

Note that I'm not claiming they don't care about SoC sales, just that it seems most forget that Qualcomm makes more money off a modem sale than they do an APQ-series SoC sale.

Care to show us the price list you base this statement on?

 

[Khato]

Care to show us the price list you base this statement on?

Recent isuppli BoM estimates have the MDM9615 + WTR1605L + Front End at anywhere from $25 to $32. They rarely put a non-modem SoC over $20.

http://www.isuppli.com/Teardowns/Ne...als-IHS-iSuppli-Virtual-Teardown-Reveals.aspx

http://www.isuppli.com/Teardowns/Ne...-Manufacturing-Cost-IHS-Teardown-Reveals.aspx

 

[Exophase]

Intel had better idle power and faster cpu than anyone on the market at the time but no one used it for it was too complicated with too many chips look at the prototype. Not a single design win what so ever with moorestown. Its successor medfield had a number of design wins less than 10 and none of them major.

It's easy to claim they had the best idle power consumption and fastest CPU with no product wins to prove it. Actually, they did have a product win, Fujitsu LOOX F-07C, and while it had a 1.2GHz Z600 they had to clock it down to only 600MHz (at the time this was competing against dual core 1.2GHz Cortex-A9 phones which would have smoked that), and it still had terrible battery life. They had to throw in Symbian paired with most likely an independent ARM-based SoC to make it usable as an actual phone.

http://www.pocketables.com/2011/10/fujitsu-loox-f-07c-review.html

Some of the problem was probably due to using Windows 7 and having high power draw of other components, but keeping the clock speed of a single core Atom so low is pretty telling in its own right.

 

[Fjodor2001]

Recent isuppli BoM estimates have the MDM9615 + WTR1605L + Front End at anywhere from $25 to $32. They rarely put a non-modem SoC over $20.

http://www.isuppli.com/Teardowns/Ne...als-IHS-iSuppli-Virtual-Teardown-Reveals.aspx

http://www.isuppli.com/Teardowns/Ne...-Manufacturing-Cost-IHS-Teardown-Reveals.aspx

Good find! But where did you find the $20 price for the APQs, like the APQ8064?

Also, note that the $25-32 price you mentioned for the MDM9615 includes the WTR1605L transceiver chip + Front End. So not directly comparable to the APQ chip. Then of course there's also the question of manufacturing and R&D cost to take into account too, when calculating the actual profit Qualcomm makes from each chip type.

 

[Khato]

Good find! But where did you find the $20 price for the APQs, like the APQ8064?

That's just what I recall from previous BoM reports. The SoC usually is in the $15-$20 range, and I believe the highest I've seen was $25.

Also, note that the $25-32 price you mentioned for the MDM9615 includes the WTR1605L transceiver chip + Front End. So not directly comparable to the APQ chip. Then of course there's also the question of manufacturing and R&D cost to take into account too, when calculating the actual profit Qualcomm makes from each chip type.

Correct that it's not directly comparable, but the total cost for Qualcomm in a comparison of MDM9615+WTR1605L+Front End against an APQ8064 has the SoC coming out above. (Snapdragon 600 is roughly an 88 mm^2 die size while the MDM9615 manufactured on the same process is around 45 mm^2, WTR1605L is approximately 25 mm^2 on a 65nm process, and then the front end analog components.) Of course the primary reason why Qualcomm can reap such profits on their LTE modem is the simple fact that they've been the only option.

 

[Exophase]

That's just what I recall from previous BoM reports. The SoC usually is in the $15-$20 range, and I believe the highest I've seen was $25.

I've seen $30 for Exynos 5410. But seriously, where is iSuppli actually getting these cost numbers for SoCs deals that are mostly cut contract to contract or even developed and used internally only? Everyone just accepts their figures blindly.

 

[liahos1]

I've seen $30 for Exynos 5410. But seriously, where is iSuppli actually getting these cost numbers for SoCs deals that are mostly cut contract to contract or even developed and used internally only? Everyone just accepts their figures blindly.

its a very good point you make. I've called them out on their figures asking what their methodology is and have yet to get a response.

 

[Nothingness]

I don't get what you guys are talking about: Qualcomm doesn't make money with their modems, they make money by licensing patents used for modems. That's their QTL division. Their modem chips sales are part of QCT.

See: http://www.reuters.com/finance/stocks/companyProfile?symbol=QCOM.O

 

[Khato]

I don't get what you guys are talking about: Qualcomm doesn't make money with their modems, they make money by licensing patents used for modems. That's their QTL division. Their modem chips sales are part of QCT.

Their QCT division does make money, so there's the question of how much of that is on the modem side of it versus the APQ series SoC. Just because the licensing division makes over 2x as much operating income doesn't invalidate the fact that Qualcomm does make money on such.

I do wonder how long Qualcomm's licensing division will get to ride the gravy train though. Seems that they're in such a dominant position on the IP primarily on the merits of legacy and now that there are other big players pursuing the same market and the associated patents on what comes next that's likely to wane.

 

[krumme]

When Qualcomm's market capitalization is roughly on par with Intel's, it's a good comparison point.

Intel earns twice as much as Qualcomm does, and now Qualcomm's growth has slowed to a crawl.

No its not. The market cap is reflected in long term term predictions. Aparently the market thinks there is just as much future potential in qq as intel.
Imho they are both in vulnerable positions. But that especially applies for intels as many of the cash cows is slowing down.

What is supricing by the results?

 

[mrmt]

No its not. The market cap is reflected in long term term predictions. Aparently the market thinks there is just as much future potential in qq as intel.

Perfect here. Market expect Qualcomm to generate as much cash as Intel in the future. I wonder if that growth rate is what shifted Intel to attack Qualcomm markets. They are fielding LTE modems soon and once they field their digital radio that market will *really* change.

 

[krumme]

Perfect here. Market expect Qualcomm to generate as much cash as Intel in the future. I wonder if that growth rate is what shifted Intel to attack Qualcomm markets. They are fielding LTE modems soon and once they field their digital radio that market will *really* change.

I agree and that situation is visible for all. But obviously there must be more to it that we dont know why the value of qq is so high. The patents must be where its hidden or what?
Btw who needs all the lte+ speed? Where is it needed?