Qualcomm (QCOM), the largest developer of digital mobile
chipsets based on CDMA wireless technology, reported
financial results for the second quarter (ended March 29) of
fiscal 2009, significantly above our estimates. Despite a
challenging economic environment, global demand for 3G
enabled mobile products and services facilitated quarterly
performance better than the company’s own guidance.

We
believe the recent legal settlement with Broadcom removes an
impediment to higher future licensing sales. Robust growth of
high-end smart-phones in developed wireless markets along
with 3G network deployments in emerging markets serve as
long-run growth catalysts for Qualcomm. We continue to
maintain our buy rating with a higher valuation target.

Our
longer-term assessment remains in tact as the company
maintains a solid net cash position of nearly $14 billion with no
debt. Free cash flow generation also remains impressive and
increases in dividend payout provide incremental return to
shareholders.Zacks Investment Research

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