Qualcomm, Inc. (QCOM)’s TRDS Tracking Lower; Analysts Unconcerned

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BMO Capital Markets analysts Tim Long, Alex Spektor and Ari Klein reiterate their Outperform rating for Qualcomm, Inc. (NASDAQ:QCOM) as they offer insights on the company’s Total Royalty Device Sales (TRDS).

Qualcomm’s December TRDS tracking a little lower so far

We offer some insights on Qualcomm, Inc. (NASDAQ:QCOM)’s Total Royalty Device Sales (TRDS) after earnings reports from Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) and Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V), and before Apple Inc. (NASDAQ:AAPL) reports on Monday. We also updated several of our Chinese OEM assumptions.

So far, TRDS for the December quarter are coming in lower than we had modeled. Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) missed our December TRDS by about $1,600 million owing mostly to lower-than-expected ASPs. Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) missed by an estimated $450- $500 million based more on a unit miss. Our numbers for the Chinese OEMs move higher by $700-$750 million as several gained market share in the quarter. There is also potential upside to ASPs at Apple Inc. (NASDAQ:AAPL), which BMO Hardware Analyst Keith Bachman is now expecting relative to his estimates. This could add $350-$400 million back to TRDS.

TRDS estimate for the December quarter is $72.3 billion

Accounting for all the above, we believe the December number is now tracking to about $71.5 billion, which would imply about a penny of EPS downside to our March estimate of $1.27 (consensus $1.26). March TRDS, and therefore June EPS, could see similar downside risk.

We are making no changes to our model at this time, and we reiterate our Outperform rating for Qualcomm, Inc. (NASDAQ:QCOM).

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