Qualcomm: The Rise, The Fall, And The Next Rise

My article then, Qualcomm (Nasdaq: QCOM) Is Racing Ahead. Its Stock Is Dead In The Water. What Gives?, QCOM 2017-05provided a background of what makes Qualcomm different and what made it timely then.

I said then that Qualcomm was of high quality in high tech with high operating and net margins but noted that it was not an easy stock for many investors to wrap their mind around what Qualcomm provides.

As consumers, we might respect a product or service and get excited about the company's stock. Amazon (AMZN), Google (Nasdaq: GOOG) (GOOGL), or Netflix (NFLX) are excellent examples of how many individual investors have made very good money solely on the basis of believing in the product. (Of course, when some of these once-hot ideas with little competition go south, as Polaroid, Eastman Kodak and scores of others have done, the pain can be pretty intense!)

When a company supplies the backbone for what other companies do, however, we can't simply use the Peter Lynch sniff test and say, "Gee, everybody's using Facebook (Nasdaq: FB). I'll look into it." Maybe that partially explains why Qualcomm is more difficult to understand, but it is worth it to make the try.

Part of Qualcomm’s investor-identity problem is that they are superb technologists who do not always communicate at an investor-friendly level. Here's an example from their website as of 16 June 2019. In discussing their latest second-generation 5G modem, they say:

“Snapdragon X55 5G Modem -- Second-generation 5G modem with integrated multi-mode support, designed to deliver breakthrough wireless performance and accelerate global 5G rollout.

“The Qualcomm Snapdragon X55 5G modem is a single-chip multi-mode solution designed to allow OEMs to build 5G multimode devices for a new era of connected experiences.

“The Snapdragon X55 5G modem supports virtually any combination of spectrum bands and/or modes: 5G mmWave and sub-6 GHz, standalone and non-standalone modes, TDD and FDD, spectrum sharing, LTE and legacy modes (3G, 2G). This is designed to enable OEMs to bring blazing fast connected devices to global networks in nearly any form factor.”

That is a wonderful copy, I suppose, when selling original equipment manufacturers on the characteristics of the product. I'm certain this stuff fires the imagination of the PhDs that Qualcomm wants to recruit from elite universities and the B2B corporate clients it wants to attract.

But Qualcomm, really, if you want to excite interest among investors willing to buy and hold your shares forever then you need to sell the sizzle, not the steak! Forget specs, what is it that you and only you invent and then produce for sale or licensing to make peoples’ lives better?

You need people to say, “Oh, I see – you make communication and navigation work at roughly the speed of an engaged human mind. You make driving safer because all those sensors that signal trouble can be triggered immediately and acted upon immediately, even faster than human reflexes would be able to. Your products make my life easier, safer and more efficient.”

Even if you move through the website to get to Investor Relations, to be able to see a recent investor presentation you have to agree to a Disclaimer and Cautionary Note Regarding Forward-Looking Statements before you are allowed to view the presentation.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I ...

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