QUALCOMM (QCOM)

Substantial Patent Protection: Qualcomm is the owner of CDMA (Code Division Multiple Access) Technology; although, in addition, a chip designer that sells proprietary chips incorporating CDMA technology, though it contracts the actual manufacture of those chips. In fact, the CDMA technology is recognized by most, apart from a few diehard fans, as the more efficient option as compared to the TDMA (Time Division Multiple Access) technology. QCOM benefits not only from the royalties paid by companies to use this technology, but from the selling of the chips incorporating this technology as well.

Qualcomm remains to this day a growth company whose stock is available today at an inexpensive price and cheap valuation; its current earnings peg its PE at a startlingly low 20! Factor in a growth rate of ~20% in revenues and net income, and investors find a company whose growth rate matches or exceeds its PE, a PEG of 1 or less (this calculation ignores the intellectual property lawsuit with Nokia (NOK), and in which Qualcomm appears to have the upper hand). The basic question with respect to Qualcomm remains whether its executives' always-present hubris ("Hey, we are Qualcomm, and we offer CDMA. Enough said!") will cause the company to snatch defeat from the jaws of victory.

A lot of carriers in US and Europe are now beginning to roll out 3G Wireless services. This bodes well for Qualcomm which sees gains from either 3G standard be it CDMA2000/EVDO in US or WCDMA in Europe.

Stock prices move, and (only) then do journalists seek explanations and justifications. Meanwhile, investors should have been well prepared for this price move... and with more upside price action yet to occur. Please note the crucial difference between investors and journalists: Investors invest in advance of price moves, whereas journalists explain price moves retrospectively.

Apply the notion of critical mass, and you have an inflection point, a moment when things change. Such as a stock that has traded sideways for a long while and thus lulls possible investors into inaction.

Apple iPhone has shaken up the mobile phone companies by its graphic rich applications and ease of use. This has prompted many handset manufacturers like Samsung, LG, Motorola, Research in Motion etc. to spend heavily on coming up with a competing product. This should mean more revenue for Qualcomm.