Qualcomm: Unmatched in wireless

This high quality tech company has outstanding financial strength and growth potential.

By TheStockAdvisors Jul 15, 2013 12:05PM

Arrow Up © Nicholas Monu/iStock Exclusive/Getty ImagesBy Ingrid Hendershot, Hendershot Investments


In 1985, seven industry veterans came together in the den of Dr. Irwin Jacob's San Diego home to discuss the idea of building "Quality Communications."


By 1989, Qualcomm (QCOM) introduced the concept that a digital communication technique called CDMA (Code Division Multiple Access) could be commercially successful in cellular wireless communications. Today, Qualcomm is a world leader in 3G, 4G and next-generation wireless technologies.


Indeed, CDMA was highly successful, and Qualcomm has rapidly grown to become a world-leading provider of wireless technology and services with revenues topping $19 billion.


Because Qualcomm led and continues to lead the development and commercialization of CDMA technology by investing 20% of sales in research and development, it owns significant intellectual property.


About 35% of 2012 revenues was derived from licensing and royalty fees, including revenues from Samsung and Apple's (AAPL) suppliers.


In addition, Qualcomm is the world's largest fabless semiconductor producer and the largest provider of wireless chipsets and software technology, which power the majority of all 3G (third generation) devices available today.


The company's unmatched wireless innovations enable new generations of increasingly powerful smartphones, computers, tablets and consumer electronics.


The need to stay connected anywhere, anytime is driving strong demand for Qualcomm's products and services, especially for applications such as email, access to the mobile Internet, downloading of videos and social networking.


Sustained long-term growth opportunities will come from new mobile computing applications, emerging market growth and increased data traffic.


As of March 31, 2013, Qualcomm's strong, debt-free balance sheet boasted more than $30 billion in cash. This substantial sum remains even after the company returned a cumulative $20.3 billion to shareholders through dividends and share repurchases since 2003.


Given Qualcomm's outstanding financial strength and continued growth, management recently increased the dividend 40% to an annualized rate of $1.40 per share. In addition, the company announced a new $5 billion stock repurchase program.


Long-term investors should check out Qualcomm, a high-quality technology leader with outstanding financial strength and healthy growth. Buy.


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