Update Qualcom QCOM: Only the momentum traders are disappointed
Qualcomm (QCOM) reported better results than Wall Street expected after the market close on July 22. The company’s earnings for its fiscal third quarter came in 2 cents a share above projections.
The stock retreated in trading on July 23, however, because momentum traders who had pushed the stock up in the days before the report didn’t raise guidance for the fourth quarter. With all the good news in the stock for the moment, they sold.
If you’ve got a slightly longer holding period than these traders, though, there was plenty in the report and conference call to keep you in the stock
Most importantly, Qualcomm said inventory was lean. That means production will quickly translate into sales and the company should be able to generate rising operating margins. With the company’s new product .pipeline full–Qualcomm is positioned to be the big winner in the upgrade to 3G and 4G networks–low inventory levels also mean that the company won’t have to resort to widespread price cutting to move lots of older product.
I think the company’s guidance for the September quarter was deliberately conservative and that growth will accelerate in the December period.
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Can you also update us on OKS. It has reached your target price. Should we sell or should we keep it?
Indeed, they are a huge player in the smart phone arena and that growth will remain one of the fastest in all of technology…not to mention its a relatively high margin area.
I continue to wonder if you can recommend any of the sectors from your book in the current market?
skllsatrm, I think it’s hard to buy whole sectors righ now. I’m looking more for specific situations where the market has created value. That said, I think the sectors to look at right now if you’re a long term investor ar technology (because growth is going to be at a premium in a slow growth economy), financials (smaller banks that remembered how to do banking should have a field day gobbling up small competitors), and global blue chips (the growth will be in the developing world but you’d sure like to buy real companies instead of hype.) Hope that helps. I’ll have more on each of these sectors as the blog matures.
Thanks Jim