Analysts Simona Jankowski, Doug Clark and Balaji Krishnamurthy at Goldman Sachs Group Inc (NYSE:GS) rate Qualcomm as a Buy.

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Consistent with guidance, QUALCOMM, Inc. (NASDAQ:QCOM) completed the sale of Omnitracs, a subsidiary providing fleet management and logistics solutions, to Vista Equity Partners for $800M in cash. As previously guided, Qualcomm expects the divestiture will contribute $0.22-0.25 in EPS in 1QFY14 (Dec), which the company will include in both GAAP and non-GAAP EPS, which would imply an updated FY14 non-GAAP EPS guidance range of $5.17-5.40.

Also see: Qualcomm The Target Of Chinese Anti-Monopoly Probe

Qualcomm’s Omnitracs sales

QUALCOMM, Inc. (NASDAQ:QCOM)’s current FY14 revenue guidance $26.0-27.5 billion (5-11% growth) already assumed only a partial quarter of Omnitracs revenue. The company estimates the sale of Omnitracs equates to about a 1 percentage point drag on full year revenue growth. Firm’s prior estimates did not include the sale, so analysts are lowering their FY14 (Sep) revenue estimate to $27.0bn from $27.3bn (for reference, Omnitracs had $372 million in sales in FY13). Their FY14 EPS goes up to $5.51 from $5.28 to reflect the gain, which the company will include in non-GAAP EPS.

This will likely be only partially reflected in consensus, creating some confusion over the next quarter. Anaysts’ FY15/16 EPS estimates ticked down by $0.01 on the removal of Omnitracs. They see the sale as consistent with QUALCOMM, Inc. (NASDAQ:QCOM)’s increased focus on shareholder returns and cost controls. The $800 million boosts Qualcomm’s domestic cash balance to slightly under $9 billion. In addition, Qualcomm can more effectively focus on core R&D initiatives while reducing combined R&D and SG&A growth to 5-7% in FY14 vs. 23% growth in FY13.

Qualcomm’s valuation

There is no change to Goldman’s 12-month price target $82, based on 15X firm’s CY14 non-GAAP EPS of $5.44 (down from $5.45 due to Omnitracs).

Qualcomm’s key risks

Risks include lower device ASPs, royalty rate fluctuations, legal challenges, increasing competition, vertical integration, and customer concentration.