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Just look at the numbers, serend and you'll understand the beating Qualcomm is getting. Intel compensates PC decline and Mobile disaster by fantastic growth and profits in the Data Center group which is Intel's true core business. Qualcomm lost market share big time in their 2 core businesses, Smartphone chipsets and Licensing revenues. And their market share loss is so bad that they are forced to sell under cost (something Intel does as well in the Mobile space, even if they hide it behind subsidies) in the low end to stay in the business. Qualcomm is still a fantastically strong company but not as strong as they used to be. Intel got their share of beating but the PC decline is already old news and their stock price already reflects that. Qualcomm market share drop is new news and the stock market reacted accordingly.
Qualcomm will derive 10% of its FY '15 revenues from IoT, and with its automotive, M2M, health, robotics,AllJoyn, SmartHome, and other paths already in place, stands to be a significant player in the space. Atheros+CSR+QCT=IoT powerhouse.
I disagree with you about "finding the money". Qualcomm has far more money, mass, and leverage than did Avago in its Broadcom purchase, and a stronger balance sheet than serial acquirer, Intel.
Money is not a problem for Qulacomm, but ecosystem can be while going into entirely new markets like automotive and IoT, where the rules of the game (and SoC IP blocks) are different. Just because Qualcomm is a resourceful company might not be sufficient. Intel's example in communications segment just tells us that.
Money is not a problem for Qulacomm, but ecosystem can be while going into entirely new markets like automotive and IoT, where the rules of the game (and SoC IP blocks) are different. Just because Qualcomm is a resourceful company might not be sufficient. Intel's example in communications segment just tells us that.
As most recent quarterly earning reported by Qualcomm and Intel, Qualcomm is in much better financial situation in terms of cash on hand and current ratio. Current ratio measures a company's ability to pay off short term debt and liability with cash and short term assets. The bigger current ratio the better for a typical company.
At the end of June, Intel has $13.87 billion cash on hand and a current ratio of 1.97 while Quacomm has $21.33 billion cash on hand and a current ratio of 4.26, according Yahoo Finance.
Put it into perspective is in the 12-month period ended with June 2015, Intel's revenue $55 billion is twice bigger than Qualcomm's $26 billion. If we only consider cash on hand and the ability to borrow more debt in order to acquire a company, Qualcomm is a lot stronger than Intel.
@philippelambinet: sure the number were ugly; but so were everyone else's, incl. its nemesis, MTK. Intel hides the real numbers now under "Client Computing", and Spreadtrum doesn't need to bother with releases anymore now that it's private. Samsung and Apple (and Huawei) are shifting toward their own chips and there is no Wintel to discourage them - not in the phone space.
I don't see a wedding with Intel changing the market dynamic. On the other hand, if Qualcomm holds together, maybe there is some innovation possible at 5G and beyond that converge the data and telecomm plane, where - maybe - Qualcomm can create some lead that Apple and Samsung might count on. And maybe not. But at least there is a hopeful scenario to work toward, however long is the shot.
@hist78: totally agreed. With dowry like that, why would Qualcomm want to marry into Intel's capex burden is simply beyond me.
It's like a glamorous lady with solid private wealth considering marrying a drunken Marquis with a number of dilapidated castles, whose expensive upkeep will quickly burn through her dowry, and in a few years all the said couple have to share would be half a bottle of cheap whisky. I can hear the lady's disgruntled son, with justified indignation: "I say f**k the castles!"
Can Qualcomm reinvent itself as "the Smart Device Company", from phones to cars to smart homes, smart cities?
(1) While continual investment in 5G may not lead to as strong a stranglehold on phones as before 4G, but a focus on emerging non-phone usages, such as cars, may still create a powerful differentiation with higher-end applications, from which Qualcomm could "swoop down" to the 5G phone market. (2) Its Zeroth platform can be leveraged here, along with more open-sourced adaptation its AllJoyn and AllSee. (3)Build a growing arsenal of leading-edge patents in post-phone era, via acquisitions: their "professorial" management background - plus their licensing expertise - may better equip them with an eye for new gems of intellectual properties?
Another endeavor that might create a uniquely strong differentiation for Qualcomm: (4) "Retro" R&D into technology adaptations for earlier telecomm iterations before 4G, where legacy networks, bandwidths and equipments could now be turned to profitable use in non-phone applications - smart infrastructures, IoE, etc. Since Qualcomm owns most of the IPs, could the company be in the best position to invent new techs on old networks and enable new usage scenarios, renewing and strengthening partnership with carriers in new domains? In developed countries this will be a much appreciated carrier value-added play; in developing markets it brings great infrastructure economy.
Qualcomm's Atheros is buying Ikanos communications which is a good play to further strengthen its Gateway solution for home. Ikanos business is in DSL modems and gateway processors. The acquisition is also cheap at < $50M and fits into strategy. Good job!!
Strategically, however, since it's a low-$ deal, of a highly-relevant business, this is the kind of cautious, am-I-doing-this-right-daddy step for a Qualcomm emerging out of recent troubles. No defiant stance and still hedging the bets either way, while everyone waits for the verdict on Snapdragon 820. Very prudent.
