02-28-2019, 02:27 PM
(02-28-2019, 01:44 PM)Roadmap2Retire Wrote: I used to own QCOM because I really liked how the technology was pervasive in all sorts of mobile devices -- no matter if you go with Apple or Android, all seemed to rely on QCOM tech.
However, over the years, I didnt like how the incentives misaligned with management & board decisions and decided to sell and exit the position after a decent profit. Case in point was record executive compensation for Mollenkopf et al. Another major point was the billions of stock buybacks occurring on open market, while the share count increased, collapsing ROIC etc.
The high profile litigation issues against AAPL are definitely concerning. Something that I wouldn't want to get caught in with my assets. There are better tech/semiconductor plays (like AVGO perhaps, even though its not exactly the same addressable market) without the risk that comes with QCOM.
Good points on the management pay and poor handling of buybacks.
AVGO does raise an interesting issue, though. AVGO tried to buy QCOM last year, and one of the more interesting things to come out of that saga was the national security component of QCOM's tech. The merger was blocked, due to national security concerns (this mobile chip technology is in just about anything that communicates over cell networks, and is obviously of keen interest to the Pentagon and our three-letter agencies). The U.S. government did not want AVGO/China/Huawei getting its hands on the source of a substantial percentage of mobile data chipsets.
In a way, I view QCOM's position as somewhat similar to BA/LMT. There is a strong defense component to its tech, and the government has made clear that it is not for sale to outside bidders. Of the five major chipset manufacturers for mobile phones, only two are based in the U.S., QCOM and INTC. I don't think that anyone can credibly argue that INTC has superior tech (they whiffed badly on 10nm, and appear to be substantially behind the curve on 7nm). I say this as an INTC shareholder. I doubt an INTC/QCOM merger would ever pass antitrust scrutiny, so I think we are left with a duopoly of QCOM/INTC in this space, with the government taking a protectionist view of these companies for so long as their tech is competitive and makes up the backbone of modern mobile communications infrastructure.