Will Qualcomm Repair Damages in 2016?

Qualcomm has taken a beating (QCOM) over the last 12 months. Even though the Qualcomm has faced many problems in the recent past, I think the stock is a good value play for long-term investors. Despite its woes, Qualcomm still holds a robust position in the wireless chips manufacturer market and that has helped the company post good quarterly results.

In the latest reported quarter, Qualcomm posted earnings per share of $0.79, $0.08 more than the consensus estimate of $0.71, whereas revenue came in at $5.5 billion, again, ahead of the analysts’ estimate of $5.2 billion.

In 2015, Qualcomm launched its next-generation high-end mobile processor known as Snapdragon 810.
This processor was introduced in the market after the tremendously popular Snapdragon 800/801. The company’s Snapdragon 800/801 was used in mostly every high-end Android mobile.

In beginning, the Snapdragon 810 appeared to be more efficient and robust processor than Snapdragon 800/801. It showed intense improvement in graphics and CPU performance, assimilate an even improved cellular modem than previous chips, and considered superior in every way. While the Snapdragon 810 performed better than Snapdragon 801, it comprises of some severe concerns that eventually stops it from being a substantial design win.

Before the launching of Snapdragon 810 integrated devices, there were numerous reports that the processor was facing the problem of overheating. Due to the problem of overheating, the company lost Galaxy S6 as well as Galaxy Note 5 design. The company refused the claims of processor overheating and reported that the devices are working perfectly. But when Snapdragon 810 integrated devices were marketed, there were many reports of overheating.

As a matter of fact, Samsung flagships are fairly high compared to the rest, which negatively affected the Qualcomm’s top line.

Although Snapdragon accounts for the worst and most disappointing product of 2015, the company is working hard on its upcoming processor- Snapdragon 820, and claims that Snapdragon 820 will not disappoint customers in 2016. At the time of testing, reports were positive and it didn’t display any signs of overheating. Qualcomm has a great opportunity to repair the damage as Samsung is about to launch its new S series device- Galaxy S7.

If the company’s claims about the Snapdragon 820 are true, it will likely win back its spot in Samsung’s flagship phones. It’s unlikely that Qualcomm will repeat the same mistake again, and I expect the company to improve on its processor this time. Hence, in my opinion, investors can bet on Qualcomm to recover in 2016 by regaining its spot in Samsung’s Galaxy phones.
Published on Jan 8, 2016
By Akshansh Gandhi

Copyrighted 2016. Content published with author's permission.

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