Qualcomm, Inc. (NASDAQ:QCOM) To Expand Beyond Core Mobile Market With Their Revenue Expected To Shrink Following Lawsuits In The U.S
Qualcomm, Inc. (NASDAQ:QCOM) is planning to go beyond core mobile markets in a move that seen as a way of boosting their revenue streams. Although they are facing a legal battle, the company expects to compete with Apple, Inc. (NASDAQ:AAPL) in growing their business segment to automotive, 5G as well as IoT.
However Kerrisdale Capital indicates that Qualcomm’s stock price could shrink by almost half thus impacting on its revenue following a series of lawsuits that the company is facing more so the one in the U.S.
Qualcomm’s strategic initiatives
Qualcomm’s Communications Vice President, Pete Lancia, stated that the company invents technology breakthroughs that not only apply to mobile but also apply to consumers’ wide selection. He indicated that company expected around $5 billion for fiscal 2018 from segments outside mobile in electronic platforms such as automotive IoT and computing segments.
He added that the rolling out of the 5G network that can support almost all segments would be vital for the company in driving innovations as they look to establish a niche in industrial IoT. Mr. Pete stated that industrial IoT is an essential segment because of the numerous opportunities since most things are becoming smarter nowadays.
Lawsuits to shrink revenue
Kerrisdale capital indicates that if the company loses to the Federal Trade Commission, then it means that they will have to licenses their core patents to competitors as well as renegotiate existing licenses terms. This will cut their licensing revenue as well as their earning power thus reducing the stock price by half.
They face a case that alleges that their chip sale practices and patent licensing are anticompetitive seeking to preserve a monopoly on LTE chips. In the past, their business model has kept them going, but things are now different because they are currently facing a more severe threat.
On the last closing their stock traded at $54.16, and according to Kerrisdale, the price will likely fall by half in the next two years. The company has a market capitalization of $66 billion with their stock owned by Fidelity and Vanguard companies.
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