QUALCOMM (QCOM) closed at $174.43 on October 12 and has returned 32.9% over six months, versus 21.2% for the Insider Monkey Billionaire Index and 14.0% for the State Street SPDR S&P 500 ETF Trust. Qualcomm earns from chip design (QCT) and from patent licensing (QTL), which charges handset makers whether or not the phone contains a Qualcomm chip. Last quarter QTL earned $881 million at a 69% margin, while the chip business earned $2.19 billion at a 26% margin. Chip revenue slipped, and a few handset customers, one of which designs its own chips, account for most of it; the shares remain roughly a third below their 52-week high. The stock trades at 19.65 times next year's expected earnings, and the article argues the market is pricing in customer concentration. It also notes that reported net margin sits above operating margin because of a one-off tax benefit.
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