Qualcomm Collaborates with EDIMAX - Analyst Blog
September 30 2011 - 12:44PM
Zacks
Qualcomm Atheros Inc., the newly acquired arm of
Qualcomm Inc. (QCOM), recently announced a
collaboration with EDIMAX Technology, a leading provider of
networking solutions, to provide a new carrier-grade
video-over-wireless (VoW) bridge.
This VOW solution will be supported by Atheros AR9580 chipset,
which supports multi-HD video streaming across homes and is ideal
for glitch-free in-home video services distribution. This modern
chipset allows error-free transmission, thus offering faster
streaming and high quality service at reduced cost.
Qualcomm Atheros also launched another chipset called AR7420
that provides faster, wired networking connectivity supporting up
to 500 mbps of power distribution across existing household
electrical wiring for consumers and service providers who offer
connectivity solutions. AR7420 chipset will be available from
October, 2011 onwards.
Earlier this year, Qualcomm acquired Atheros for roughly $3.3
billion, which is believed to be largest acquisition in the history
of Qualcomm. The acquisition enables Qualcomm to diversify in the
consumer electronics segment, particularly in the home networking
market where Atheros manufactures Wi-Fi chips for televisions,
video games, printers, and other home devices.
We believe that Qualcomm’s record-high earnings, strong balance
sheet, accretive acquisition plans, product diversifications and
solid management outlook for the current fiscal year will act as
positive catalysts in the long run. Moreover, the growing
popularity of smartphones and tablets coupled with increased
deployment of 3G/4G networks will further drive the stock
upward.
However, stiff competition from formidable rivals like
Broadcom Corporation (BRCM) and Texas
Instruments Inc. (TXN) as well as lower ASP of smartphones
will negatively impact Qualcomm’s royalty business going
forward.
We, thus, maintain our long-term Neutral recommendation on
Qualcomm. Currently, Qualcomm has a Zacks #3 Rank, implying a
short-term Hold rating on the stock.
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