A Safer Bet Than Apple (or Samsung or Blackberry)


Jim Jubak Image Jim Jubak Founder and Editor, JubakPicks.com

Because this company sells crucial components throughout the smartphone industry, it's relatively unaffected by a bad quarter from any one company, writes MoneyShow's Jim Jubak, also of Jubak's Picks.

When I added shares of Qualcomm (QCOM) to my Jubak’s Picks portfolio on October 10, I argued that the company’s keystone position in the wireless industry as a supplier to both Samsung and Apple (AAPL) made the stock a winner no matter which company came out ahead in the smartphone wars.

Yesterday, after both Apple and Samsung reported sales and earnings that disappointed the markets, Qualcomm reported an earnings and revenue beat and raised guidance for the next quarter based on just that positioning. Shipments of Qualcomm’s modem chips—sold to both Apple and Samsung (and other smartphone makers)—reached 182 million units, up 17% for the same quarter (the first quarter of the company’s fiscal year) of fiscal 2012.

Sales of actual chips are only part of Qualcomm’s revenue stream. The company also makes money from collecting licensing fees when other manufacturers use its technology. (As the industry as a whole grows, so do Qualcomm’s licensing revenues.) Licensing fees climbed 20% in the quarter.

Earnings for the company’s fiscal first quarter were $1.26 a share (excluding non-recurring items), 14 cents above the Wall Street consensus.