Aug 04, 2017

Data Overview Summary

52 Week High-Low $71.62 - $51.05 Qualcomm posted strong third-quarter 2017 financial results. Over the past three
20 Day Average Volume 9,970,601
months, the stock price grew 1.58%, but failed to beat the industry's 3.61% gain.
Moreover, competitive mobile phone chipset market, stringent regulatory norms along
Beta 1.29
with anti-competitive and unfair business practices charges act as risks. The dispute
Market Cap 78.23 B with Apple is getting uglier. Qualcomm settled with BlackBerry by paying U.S. $940
Dividend / Div Yld $2.28 / 4.31% million. However, Qualcomm gained the Taiwan Fair Trade Commission’s regulatory
Industry Wireless Equipment
approval for the NXP Semiconductor buyout, but the deal is under thorough
investigation by the European Commission. Qualcomm has launched its Mesh
Industry Rank 221 / 265 (Bottom 17%)
Networking Platform and seeks FCC's Approval for Antenna Pattern Testing.
Current Ratio 2.95 Qualcomm’s Snapdragon processor is known for its Internet of Things applications.
Debt/Capital 38.28% Patent license network deals, tie-up with AT&T and Ericsson for 5G network trials
bode well for Qualcomm’s prospects.
Net Margin 17.26%

Price/Book (P/B) 2.52

Price/Cash Flow (P/CF) 19.09 Elements of the Zacks Rank

Earnings Yield 6.87%
Agreement Estimate Revisions (60 days)
Debt/Equity 0.62

Value Score 83% 100% 80% 100%

P/E (F1) 14.49

P/E (F1) Rel to Industry 14.40 Q1 (Current Qtr) Q2 (Next Qtr) F1 (Current Year) F2 (Next Year)
PEG Ratio 1.55 Revisions: 6 Revisions: 1 Revisions: 5 Revisions: 2
Up: 1 Down: 5 Up: 0 Down: 1 Up: 1 Down: 4 Up: 0 Down: 2
P/S (F1) 3.43

P/S (TTM) 3.48

Magnitude Consensus Estimate Trend (60 days)
P/CFO 19.09

P/CFO Rel to Industry 18.75

EV/EDITDA Annual 9.01

Growth Score
Proj. EPS Growth (F1/F0) -2.39% 60 30 7 Current 60 30 7 Current 60 30 7 Current 60 30 7 Current
Days Days Days Days Days Days Days Days Days Days Days Days
Hist. EPS Growth (Q0/Q-1) -7.40 Q1 -12.66% Q2 -24.00% F1 -2.13% F2 -23.34%
Qtr CFO Growth -21.84

2 Yr CFO Growth -36.63 Upside Zacks Consensus Estimate vs. Most Accurate Estimate
Return on Equity (ROE) 18.61%

(NI - CFO) / Total Assets -0.34

Asset Turnover 0.35

Momentum Score Most Accurate: 0.69 Most Accurate: 0.76 Most Accurate: 3.67 Most Accurate: 2.66
Zacks Consensus: 0.69 Zacks Consensus: 0.76 Zacks Consensus: 3.67 Zacks Consensus: 2.66
1 week Volume change 22.46%
Q1 0.00% Q2 0.00% F1 0.00% F2 0.00%
1 week Price Cng Rel to Industry 1.51%

(F1) EPS Est 1 week change 0.00%

Surprise Reported Earnings History
(F1) EPS Est 4 week change 0.07%

(F1) EPS Est 12 week change -3.67%

(Q1) EPS Est 1 week change -5.48%

Reported: 0.70 Reported: 1.20 Reported: 1.06 Reported: 1.17 Average 4 Qtr
Surprise
Estimate: 0.67 Estimate: 1.05 Estimate: 1.06 Estimate: 0.98
Q End 06/17 Q End 03/17 Q End 12/16 Q End 09/16

© 2017 Zacks Investment Research, All Rights Reserved 10 S. Riverside Plaza Suite 1600 · Chicago, IL 60606
 The data on the front page and all the charts in the report represent market data as of 08/03/17, while the report's text is as of
07/24/2017

Overview
Qualcomm Inc. (QCOM), designs, manufactures and markets digital
wireless telecom products and services based on the Code Division
Multiple Access (CDMA) technology. The products include CDMA-
based integrated circuits (ICs) and system software for wireless voice
and data communications as well as global positioning system (GPS)
products. Qualcomm’s business is organized into two reporting
segments as follows:

Qualcomm CDMA Technologies (QCT) (75.44% of total

revenue in 3Q17) : This segment reports operating results for
sales of CDMA-based integrated circuit devices (chips) and
system software for wireless voice and data communications,
as well as GPS products. QCT’s integrated circuit (IC)
products are used mainly in mobile phones, wireless data
access cards and infrastructure equipment. QCT offers a
broad portfolio of products that support CDMA2000 1X, 1xEV-
DO, EV-DO Revision A, EV-DO Revision B and UMB.
Qualcomm also develops IC that supports GSM/GPRS,
WCDMA, HSDPA and HSUPA technologies. This segment
accounted for 66.7% of Q4 fiscal 2016 total revenue.

Qualcomm Technology Licensing (QTL) (21.82%) : This

segment reports revenues received from licenses to the
intellectual property portfolio, which includes CDMAOne, CDMA2000 1X EV-DO/1xEV-DV, TD-SCDMA, and WCDMA technology
solutions. QTL generates revenues from license fees as well as royalties based on global sales by licensees of products
incorporating or using Qualcomm’s intellectual property. This segment generated 33.3% of Q4 fiscal 2016 total revenues.

Zacks Equity Research: QCOM www.zacks.com Page 2 of 11

 Reasons To Sell:
Over the past three months, Qualcomm marked a growth of 1.58%, but failed to beat Aggressive competition in
the Zacks categorized Wireless Equipment industry's gain of 3.61%. the mobile phone chipset
market may hurt
Qualcomm has been facing three major problems in its business lately. Secondly, a Qualcomm’s profits in the
shift in the share among OEMs (original equipment manufacturer) at the premium tier future
has reduced Qualcomm’s near-term opportunity to sell integrated chipsets from the
Snapdragon platform. Finally, intensified competition in the Chinese market has added
to the concerns. Moreover, Qualcomm has been facing challenges from low-cost chip manufacturers like MediaTek and Rockchip as
well as handset manufacturers’ SoC (System on Chip) projects such as Exynos by Samsung. Notably, Samsung is the largest
global manufacturer of smartphones. Also, the company is the second largest customer of Qualcomm’s chipsets. Thus, Samsung’s
decision to dump the 810 chipset came as a huge blow for Qualcomm. Likewise, manufacturers like Sony Corp. have incrementally
adopted MediaTek’s SoC for their product lines, bringing on desperate times for Qualcomm. Therefore, if this trend continues,
Qualcomm’s profitability may be hurt in the long term.

In May 2017, Qualcomm settled a licensing dispute with BlackBerry Limited by paying U.S. $940 million, on or before May 31, 2017.
The settlement includes an $815 million payment plus interest, attorneys’ fees and net of certain royalties due from BlackBerry for
calendar 2016 and the first quarter of calendar 2017. This is in relation to the over-payment by BlackBerry to Qualcomm in royalty
payments from 2010 to 2015 under terms of a licensing deal. This marks a big victory for BlackBerry which is focused on expanding
its software development and licensing businesses. The company expects this monetary addition to be free from taxes. We expect
Qualcomm to quickly resolve all such disputes and focus on its growth strategies.

In Jan 2017, Qualcomm was slapped with a $1 billion lawsuit related to licensing royalty payments by tech giant Apple Inc. In the
suit filed in the U.S. District Court for the Southern District of California, Apple has accused Qualcomm of overcharging for chips and
refusing to pay some $1 billion in promised rebates. Notably, just a couple of days before the filing, Qualcomm had faced an anti-
trust lawsuit from the U.S. Federal Trade Commission (FTC). The regulator filed a case with the U.S. District Court for the Northern
District of California claiming that the company has used anti-competitive measures to maintain a monopoly in the baseband chipset
market. The FTC said Qualcomm had established an exclusivity agreement with iPhone and iPAD maker Apple from 2011 to 2016.
Through this deal, the San Diego-based chipmaker provided billions of dollars in license rebates to Apple, subject to the condition
that Apple would not use the chipsets of Qualcomm’s rival companies. The company recognized that any competitor that won
Apple’s business would become stronger, and used exclusivity of the deal to prevent the latter from working with its competitors.

On Dec 27, 2016, South Korea's regulatory authority for economic competition, Korea Fair Trade Commission (KFTC) imposed an
administrative fine of approximately 1.03 trillion South Korean Won (approximately $865 million) on Qualcomm due to unfair
business practices. This fine is the latest and largest in a series of antitrust rulings and investigations on Qualcomm by regulators
across the globe and in South Korea. The South Korean regulator said that many of Qualcomm's business practices are in
violation of the Korean competitive law, including those related to patent licensing and modem chip sales. KFTC criticized
Qualcomm for misusing its dominant market position and forcing handset makers to pay royalties for an unnecessarily broad set of
patents as part of sales of its modem chips. Qualcomm has also been accused of competing unfairly by refusing or limiting licensing
of its standard essential patents for modem chips to rival chipmakers such as Intel Corporation, Samsung Electronics Co Ltd and
MediaTek Inc. Qualcomm will be required to pay the fine within 60 days of the issuance of the written order, subject to possible
adjustment or refund as part of the appeal process. However, further details regarding this decision will not be available until the
KFTC issues a written order, which is expected to take another four to six months. Regulators in other jurisdictions, including the
U.S. and Taiwan, are also carrying out investigations on Qualcomm.

Aggressive competition in the mobile phone chipset market may hurt Qualcomm’s profits in the future. The company is facing
severe competitive threat from its closest rival, Intel, which has been redesigning its chipsets for the mobile computing market. Intel
started delivering multi-mode LTE baseband modem. Competition is also likely to emanate from formidable rivals like Broadcom and
Nvidia. Broadcom already introduced its LTE baseband chipset in the market, while Nvidia launched Tegra 4i, its LTE-integrated
application processor. Also, opposition emanates from low-cost chip suppliers like Mediatek of Taiwan, VIA Technologies of China
and Spreadtrum Communications. Although the global smartphone market is expected to maintain its momentum in the next 4–5
years, major part of this growth is likely to come from the low-cost emerging markets, which may exert pressure on Qualcomm’s
margins.

Risks
Qualcomm has moved a step closer toward its proposed acquisition of Netherlands-based mobile chipset giant NXP
Semiconductors. Recently, NXP Semiconductors announced that its shareholders have approved the company’s takeover by
Qualcomm during an extraordinary general meeting of shareholders held on Jan 27, 2017. In Oct 2016, Qualcomm has entered
into a definitive agreement to acquire the Netherlands-based chipset giant NXP Semiconductors. Per the deal, Qualcomm will pay
$110 per NXP Semiconductor share in cash reflecting an enterprise value of approximately $47 billion (equity value of $39 billion)
for the Dutch chipset maker. The deal is anticipated to be closed by the end of 2017 subject to all necessary regulatory approvals.

Zacks Equity Research: QCOM www.zacks.com Page 3 of 11

 NXP Semiconductors is a leading manufacturer of high-performance, mixed-signal mobile chipsets. The company has a strong
clientele serving more than 25,000 customers through its direct sales channel and global network of distribution channel partners.
The combined entity is likely to generate annual revenues of over $30 billion. Further, it will position itself as a strong player in the
next-generation mobile chipset segment with a potential market size of $138 billion by 2020. On Jun 15, 2017, the Taiwan Fair
Trade Commission has given regulatory clearance to this pending deal. However, the deal is under a thorough investigation by
the telecom regulatory body of the European Union, the European Commission (EC). The EC has a 90-working-days’ time limit,
until Oct 17, 2017, to take a decision. The EC will probe in-depth whether the deal could lead to higher prices, exclusion of rival
chipset suppliers and reduced innovation in the semiconductor industry.

Qualcomm is the undisputed leader in the global wireless baseband chipset market. At present, Qualcomm dominates this market
with approximately 66% of revenue share, followed by 15% of Mediatek Inc. and 5% of Spreadtrum Communications. Recently,
Gartner reported that Qualcomm is the third largest global player in the overall (including mobile handset, laptop and PC
semiconductor market with an estimated 5.6% share after 15.0% share of Intel and 10.4% share of Samsung. Qualcomm benefits
from the significant growth of 3G/4GLTE wireless technologies and smartphones in the emerging markets, particularly in China.
Moreover, growing deployment of 4G Long Term Evolution (LTE) technology in China may further drive Qualcomm’s chip
demand. The company is a major chipset provider to Apple and Samsung, which together constitute 40% of the smarphone and
50% of the tablet market, globally. In addition, Qualcomm’s Gobi mobile Internet connectivity solutions will provide 3G/4G LTE
connectivity to devices that will run on the Windows 8 software. Qualcomm is the sole chipset developer for both Windows-based
smartphones and notebooks.

Qualcomm currently has more than 255 royalty bearing licensees worldwide. Additionally, the company has over 90 single-mode
OFDMA licensees. Notably, Qualcomm’s flagship Snapdragon 820 processor is now available in leading devices such as the
Samsung Galaxy S7 and S7 Edge, LG G5, Xiaomi Mi5, along with devices from Sony, HTC, HP, and others. Qualcomm has now
over 115 Snapdragon 820 designs and expects volume to ramp on this platform through 2H16. During the fiscal second quarter
2017, Qualcomm shipped approximately 179 million CDMA-based MSM (Mobile Station Modem) chipsets, reflecting a decline of
5% year over year. The company shipped 398–402 million 3G/4G handsets in the reported quarter, up 19% year over year. The
average selling price of a 3G/4G handset with an in-built Qualcomm chipset during the quarter was around $204–$210, flat year
over year.

For Qualcomm, associating with China’s leading smartphone manufacturers means additional royalties. The company has
signed multiple licensing deals with various Chinese smartphone makers including Xiaomi. With these deals, Qualcomm intends
to extend its pledge to constantly aid in the growth of Chinese companies and develop wireless networks, devices and
applications. We believe these new patent license agreements will lessen the chip maker’s struggles in China and take it a step
closer to solving issues pertaining to its most profitable licensing patent business. In Dec 2016, Qualcomm announced a patent
license agreement entailing 3G and 4G networks with Gionee Communication Equipment Co. Ltd. Per the deal, Qualcomm has
granted Gionee a patent license to develop, manufacture and sell 3G WCDMA (Wideband Code Division Multiple Access),
CDMA2000 (Code-Division Multiple Access) and 4G LTE (including 3-mode: GSM, TD-SCDMA and LTE-TDD) devices in China.
The royalties payable by Gionee are in sync with the terms of the rectification plan submitted by Qualcomm to China’s National
Development and Reform Commission (NDRC). Gionee is a smartphone manufacturer based in Shenzhen, Guangdong.
Founded in 2002, it is one of China’s largest mobile phone manufacturers. Qualcomm’s improved and upgraded technologies
are allowing companies to build new and updated products and services across the wireless ecosystem and thus better serve
customers.

On Apr 10, 2017, Qualcomm has counter attacked Apple in relation to the last $1 billion lawsuit filed by the latter in the Southern
District of California in Jan 2017. Apple had accused Qualcomm of overcharging for chips and refusing to pay some $1 billion in
promised rebates. In its response, Qualcomm clearly mentioned the value of its invented technologies, their contribution and
share in the industry through its licensing program. The filing also details Apple’s illegal and improper handling of agreements
and negotiations with device manufacturers, misleading regulators to attack Qualcomm around the world and not utilizing the full
performance of Qualcomm's modem chips in its iPhone7. Reports also state that Apple had even warned Qualcomm against
publicizing the better performance of iPhones with Qualcomm chips. Considering all the damages incurred, Qualcomm henceforth
wants Apple not to further interfere with its agreements with the manufacturers of iPhones and iPads. The legal battle is basically
centered around a high-stakes dispute between the two companies.

In Jan 2017, AT&T, Ericsson and Qualcomm announced plans to test the initial 3GPP (3rd Generation Partnership Project) 5G
New Radio (NR) specification in the second half of 2017. The trio is planning to test high-band frequencies for the next-generation
5G technology, which should deliver "multi-gigabit Internet service" over the air. Such technical specifications will allow the
downloading of a HD (high definition) film wirelessly on a mobile device. AT&T will be using 28GHz and 39GHz spectrum bands
in the trial while Qualcomm will provide prototype devices and Ericsson will offer base station solutions. Notably, the two spectrum
bands to be commercially deployed here – 28GHz and 39GHz – have been assigned by U.S. telecom regulator, Federal
Communications Commission (FCC). The next-gen 5G network will provide 50 times the throughput of the currently available 4G
LTE standard. Further, 5G technology is designed to be more power efficient than any other standard wireless networks
available. Therefore, 5G-enabled mobile devices are likely to last longer than their 3G or 4G counterparts. Moreover, superfast
5G mobile networks will be of utmost importance for the management of exponential growth in Internet-connected devices,

Zacks Equity Research: QCOM www.zacks.com Page 4 of 11

 popularly known as Internet of Things (IoT).

In Dec 2016, Telefonaktiebolaget LM Ericsson (publ) and Qualcomm Technologies, Inc., an operating unit of QUALCOMM
Incorporated, recently announced the completion of China’s first end-to-end data call, using the new cellular IoT eMTC/Cat-M1
technology. Development and commercialization of an ecosystem for cellular IoT solutions is one of Ericsson’s topmost priorities.
eMTC/Cat-M1 is a new cellular IoT technology, which was standardized in 3GPP Release 13, for low-power wide-area (LPWA)
applications and services. The data call was conducted using Qualcomm Technologies’ MDM9206 LTE modem and Ericsson
Networks Software 17A, at the lab of the research division of China Mobile Research Institute. This latest technology can support
a variety of LPWA use cases that require higher mobility support. Ericsson and Qualcomm are confident that this will help
improve performance in terms of terminal cost, standby time and coverage, compared with the existing 4G technologies. Notably,
eMTC/Cat-M1 technology can support the delivery of a gamut of IoT services, including smart energy, asset tracking, industrial
control and so on.

Meanwhile, in an attempt to foray beyond mobile phones, Qualcomm has revealed that it has entered into a partnership with
German automobile manufacturer Volkswagen AG’s subsidiary Audi. Per the collaboration, the automaker will be using
Snapdragon 602A mobile processors in select 2017 model vehicles. Moreover, the company unveiled the latest generation of its
automotive-grade system-on-chip, Snapdragon 820A, which will drive in-car infotainment and communication within vehicles.
Also, Qualcomm is working with Google to develop and power Android Auto in-car solutions with its Snapdragon automotive
processors. The partnership should help the company accelerate innovation in the auto space, creating the next generation of in-
car experiences and establishing a new revenue stream.

Qualcomm tied up with AT&T to evaluate Unmanned Aircraft Systems (UAS) or drones on commercial 4G LTE networks.
Notably, there is a growing consensus that consumer drones will play a pivotal role for consumer businesses in future. Although
the majority of Qualcomm’s revenue comes from the mobile phones and tablets, the market is maturing, with companies making
few innovations. The company may have perceived stagnation in this segment for the coming years and thus is ready to foray into
new space. Qualcomm is also actively involved in the production of chipsets for the 5G mobile standard and is sharing
partnership with U.S. telecom behemoths like Verizon and Ericsson for the same, which may propel growth in the days ahead.

Last Earnings Report

Qualcomm Tops Q3 Earnings and Revenues Estimates Quarter Ending 06/2017

Report Date Jul 19, 2017

Qualcomm’s third-quarter 2017 net income (on a GAAP basis) came in at $866 million or
$0.58 per share compared with $1,444 million or $0.97 in the year-ago quarter. Adjusted Sales Surprise 2.87%
earnings per share (excluding special items) were $0.70, ahead of the Zacks Consensus EPS Surprise 4.48%
Estimate of $0.67. Quarterly EPS 0.70
Annual EPS (TTM) 4.13
Revenue

Quarterly total revenue of $5,371 million was down 11.1% year over year while surpassing
the Zacks Consensus Estimate of $5,221 million.

Segment-wise, Qualcomm Code Division Multiple Access (CDMA) Technologies contributed $4,052 million revenues compared with
$3,853 million in the prior-year quarter. EBT (earnings before tax) margin was 14% compared with 9% in the prior-year quarter.
Qualcomm Technology Licensing generated $1,172 million, down a whopping 42.5% year over year. EBT margin was 73% compared
with 86% in the prior-year quarter.

Chipset Statistics

During the fiscal third quarter, Qualcomm shipped approximately 187 million CDMA-based MSM (Mobile Station Modem) chipsets,
reflecting a decline of 7% year over year. This was also below the midpoint of 190 million, which was the third-quarter chipset outlook
given by management earlier.

Operating Metrics

Quarterly operating income came in at $773 million compared with $1,592 million in the year-ago quarter. Quarterly operating margin
was 14.4% compared with 26.3% in the prior-year quarter. Quarterly EBT was $858 million compared with $1,693 million in the year-
ago quarter.

Cash Flow

During the third quarter of fiscal 2017, Qualcomm generated $82 million of cash from operating activities compared with $1,840 million
in the prior-year quarter. Free cash flow in the reported quarter was a negative $95 million compared with a positive $1,704 million in
the prior-year quarter.

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 Liquidity

At the end of the third quarter of fiscal 2017, Qualcomm had $20,863 million of cash, cash equivalents and marketable securities
compared with $18,648 million at the end of fiscal 2016. Total outstanding debt was $21,898 million at the end of the reported quarter
compared with $10,903 million at the end of fiscal 2016. The debt-to-capitalization ratio at the end of the reported quarter was 0.38
compared with 0.24 at the end of fiscal 2016.

Dividend Payment to Stockholders

During the third quarter of fiscal 2017, the company returned nearly $1.1 billion to stockholders. This included $844 million (57 cents per
share) of cash dividend and another $300 million through repurchases of 5.2 million shares of common stock.

Fourth-Quarter Fiscal 2017 Outlook

Revenues for the fourth quarter of fiscal 2017 are estimated in the range of $5.4–$6.2 billion. GAAP earnings per share are estimated
between 55 cents and 65 cents. Non-GAAP earnings per share are estimated between 75 cents and 85 cents. Qualcomm is expected
to ship 205–225 million MSM chipsets in the ongoing quarter.

Recent News
Qualcomm Loses EU Case, Slapped with Daily Fine of $6,65,000 - Jul 18, 2017

Qualcommhas been fined with 580,000 euros ($665,000) per day after losing a court bid against European Union (EU).

Qualcomm Announces Quarterly Cash Dividend - Jul 13, 2017

The Board of Directors of Qualcomm announced a quarterly cash dividend of $0.57 per common share. The dividend will be paid on
Sep 20, 2017, to stockholders of record at the closure of business on Aug 30, 2017.

Qualcomm Seeks FCC Nod to Test 5G Standard on 3.5 GHz Band - Jul 12, 2017

Qualcomm recently sought permission from the U.S. telecom regulator, Federal Communications Commission (FCC), to modify its
license to enable 5G development testing within the 3.5 GHz frequency band.

Qualcomm Alleges Apple of Patent Violation, Fuels Legal War - Jul 07, 2017

Qualcommfiled a complaint with the United States International Trade Commission (ITC) against tech giant Apple for infringing six of its
patents covering various aspects of mobile phone technology.

Qualcomm Receives Antitrust Clearance by the Taiwan Fair Trade Commission for NXP Semiconductors Acquisition - Jun 15,
2017

Qualcomm recently announced that the Taiwan Fair Trade Commission has given regulatory clearance to the pending
acquisition of NXP Semiconductors by Qualcomm.
Qualcomm-NXP Semiconductors Deal Facing In-Depth Probe by EC - Jun 13, 2017

The telecom regulatory body of the European Union, the European Commission (EC), has launched a thorough investigation into the
proposed acquisition of Netherlands-based NXP Semiconductors NV by U.S. mobile chipset giant, Qualcomm. The EC has a 90-
working-days’ time limit, until Oct 17, 2017, to take a decision.

Qualcomm to Seek FCC's Approval for Antenna Pattern Testing - Jun 12, 2017

Qualcomm recently appealed to the U.S. telecom regulator, Federal Communications Commission (FCC) for Special Temporary
Authority (STA) to conduct limited antenna pattern testing of satellite antennas designed for use in the 12.2-12.7 GHz frequency range.
The company estimates a span of nearly six months for conducting tests from Jul 1 to Dec 30, 2017.

Qualcomm Extends Benefits of 802.11ad Wi-Fi to Enterprises and Outdoor Environments - May 30, 2017

Qualcomm Technologies, Inc., a subsidiary of Qualcomm Incorporated announced today that it is extending the benefits of its
802.11ad Wi-Fi technology to a variety of enterprise and outdoor environments.

Qualcomm's Mesh Networking Platform to Improve Home Wi-Fi - May 29, 2017

Qualcomm, through its subsidiary, Qualcomm Technologies, Inc., unveiled the Qualcomm Mesh Networking Platform. The

Zacks Equity Research: QCOM www.zacks.com Page 6 of 11

 platform was launched at the Computex trade show in Taipei, Taiwan on May 30, 2017. Qualcomm Mesh Networking Platform
is a unique combination of technologies upon which original equipment manufacturers (OEM) and broadband carriers can
deliver next-generation connected home experiences.

Qualcomm to Settle License Dispute with BlackBerry - May 29, 2017

Qualcomm will settle a licensing dispute with BlackBerry Limited by paying U.S. $940 million, on or before May 31, 2017. The
settlement includes an $815 million payment plus interest, attorneys’ fees and net of certain royalties due from BlackBerry for
calendar 2016 and the first quarter of calendar 2017.
Qualcomm Updates Lawsuit to Counter Attack Apple - May 25, 2017

Qualcomm recently updated one of its lawsuits providing more evidences that Apple Inc. is interfering with its existing arrangements
with the contract manufacturing firms.

Zacks Equity Research: QCOM www.zacks.com Page 7 of 11

 Industry Analysis Zacks Industry Rank: 221 / 265 (Bottom 17%) Top Peers

Juniper Networks, Inc. (JNPR)

Nokia Corporation (NOK)
PC-Tel, Inc. (PCTI)
ARC Group Worldwide, Inc. (ARCW)
InterDigital, Inc. (IDCC)
Ericsson (ERIC)
Comtech Telecommunications Corp. (CMTL)
Harris Corporation (HRS)

Industry Comparison Wireless Equipment | Position in Industry: 11 of 17 Industry Peers

QCOM X Industry S&P 500 ERIC NOK ZTCOY

VGM Score - -
Market Cap 78.56 B 387.77 M 20.65 B 21.11 B 38.05 B 1.90 B
# of Analysts 21 6 14 7 10 1
Dividend Yield 2.65% 0.00% 1.82% 3.37% 2.63% 0.92%

Value Score - -
Cash/Price -18.45 11.27 9.88 8.58 35.55 50.30
EV/EBITDA 9.01 12.66 12.91 11.65 57.94 NA
PEG Ratio 1.55 1.55 2.00 67.79 1.23 NA
Price/Book (P/B) 2.52 1.88 3.24 1.50 1.93 0.31
Price/Cash Flow (P/CF) 19.09 10.51 13.50 10.51 38.46 1.44
P/E (F1) 14.49 17.94 19.02 253.20 23.29 17.36
Price/Sales (P/S) 3.43 1.44 2.50 0.87 1.49 0.11
Earnings Yield 6.87% 2.55% 5.22% 0.47% 4.28% 5.77%
Debt/Equity 0.62 0.16 0.68 0.22 0.20 0.12
Cash Flow ($/share) 4.97 1.26 5.41 0.63 0.54 0.04

Growth Score - -
Hist. EPS Growth (3-5 yrs) -2.39% 9.01% 7.16% -92.75% 47.37% 252.63%
Proj. EPS Growth (F1/F0) -6.88% 4.55% 9.54% -91.94% 16.67% 270.59%
Curr. Cash Flow Growth -8.62% 1.01% 5.36% -43.77% 66.38% -98.20%
Hist. Cash Flow Growth (3-5 yrs) 3.12% 11.78% 6.71% -11.63% 17.74% -37.18%
Current Ratio 2.95 1.79 1.36 1.73 1.57 1.23
Debt/Capital 38.28% 17.27% 41.73% 17.96% 16.57% 10.93%
Net Margin 17.26% 0.41% 9.92% -6.40% -1.78% -1.69%
Return on Equity 18.61% 5.21% 15.93% 7.35% 7.07% -1.04%
Sales/Assets 0.35 0.81 0.55 0.77 0.55 0.74
Proj. Sales Growth (F1/F0) -2.77% 0.08% 5.22% -6.72% -2.48% 14.97%

Momentum Score - -
Daily Price Chg -0.45% -0.16% -0.15% -0.16% -0.31% 0.00%
1 Week Price Chg 1.51% -0.37% -0.00% 1.93% 7.13% -3.19%
4 Week Price Chg -4.11% 0.00% 1.43% -12.45% 4.82% 6.45%
12 Week Price Chg -3.90% 1.23% 3.00% -2.47% 6.19% 36.08%
52 Week Price Chg -12.85% 17.56% 12.24% -12.08% 14.59% 95.15%
20 Day Average Volume 9,008,564 146,480 0 6,736,052 12,851,755 1,788
(F1) EPS Est 1 week change 0.00% 0.00% 0.03% 0.00% 22.63% 0.00%
(F1) EPS Est 4 week change 0.07% 0.00% 0.33% -90.74% 22.63% 0.00%
(F1) EPS Est 12 week change -3.67% -3.33% 1.00% -91.28% 21.74% -3.33%
(Q1) EPS Est Mthly Chg -7.69% 0.00% 0.00% -70.67% 14.29% NA

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 Zacks Rank Education
The Zacks Rank is calculated from four primary inputs: Agreement, Magnitude, Upside and Surprise.

Agreement
This is the extent which brokerage analysts are revising their earnings estimates in the same
direction. The greater the percentage of estimates being revised higher, the better the score for this
component.

For example, if there were 10 estimate revisions over the last 60 days, with 8 of those revisions up,
and the other 2 down, then the agreement factor would be 80% positive. If, however, 8 were to the
downside with only 2 of them up, then the agreement factor would be 80% negative. The higher the
percentage of agreement the better.

Magnitude
This is a measure based on the size of the recent change in the current consensus estimates. The
Zacks Rank looks at the magnitude of these changes over the last 60 days.

In the chart to the right, the display shows the consensus estimate from 60-days ago, 30-days ago,
7-days ago, and the most current estimate The difference between the current estimate and the
estimate from 60-days ago is displayed as a percentage. A larger positive percentage increase will
score better on this component.

Upside
This is the difference between the most accurate estimate, as calculated by Zacks, and the
consensus estimate. For example, a stock with a consensus estimate of $1.00, and a most
accurate estimate of $1.05 will have an upside factor of 5%.

This is not an indication of how much a stock will go up or down. Instead, it's a measure of the
difference between these two estimates. This is particularly useful near earnings season as a
positive upside percentage can be used to help predict a future surprise.

Surprise
The Zacks Rank also factors in the last few quarters of earnings surprises. Companies that have
positively surprised in the recent past have a tendency of positively surprising again in the future (or
missing if they recently missed).

A stock with a recent track record of positive surprises will score better on this factor than a stock
with a history of negative surprises. These stocks will have a greater likelihood of positively
surprising again.

Zacks Style Score Education

The Zacks Style Score is as a complementary indicator to the Zacks Rank, giving investors a way to focus
on the best Zacks Rank stocks that best fit their own stock picking preferences.

Academic research has proven that stocks with the best Growth, Value, and Momentum characteristics outperform the market. The
Zacks Style Scores rate stocks on each of these individual styles and assigns a rating of A, B, C, D and F. An A, is better than a B; a B
is better than a C; and so on.

As an investor, you want to buy stocks with the highest probability of success. That means buying stocks with a Zacks Rank #1 or #2,
Strong Buy or Buy, which also has a Style Score of an A or a B.

Zacks Equity Research: QCOM www.zacks.com Page 10 of 11

 Disclosures
The analysts contributing to this report do not hold any shares of this stock. The EPS and revenue forecasts are the Zacks
Consensus estimates. Additionally, the analysts contributing to this report certify that the views expressed herein accurately reflect the
analysts' personal views as to the subject securities and issuers. Zacks certifies that no part of the analysts compensation was, is, or
will be, directly or indirectly, related to the specific recommendation or views expressed by the analyst in the report. Additional
information on the securities mentioned in this report is available upon request. This report is based on data obtained from sources we
believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. Because of individual objectives, the
report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed
herein are subject to change. This report is not to be construed as an offer or the solicitation of an offer to buy or sell the securities
herein mentioned. Zacks or its officers, employees or customers may have a position long or short in the securities mentioned and buy
or sell the securities from time to time. Zacks uses the following rating system for the securities it covers which results from a
proprietary quantitative model using trends in earnings estimate revisions. This model is proven most effective for judging the timeliness
of a stock over the next 1 to 3 months. The model assigns each stock a rank from 1 through 5. Zacks Rank 1 = Strong Buy. Zacks Rank
2 = Buy. Zacks Rank 3 = Hold. Zacks Rank 4 = Sell. Zacks Rank 5 = Strong Sell. We also provide a Zacks Industry Rank for each
company which provides an idea of the near-term attractiveness of a company s industry group. We have 264 industry groups in total.
Thus, the Zacks Industry Rank is a number between 1 and 264. In terms of investment attractiveness, the higher the rank the better.
Historically, the top half of the industries has outperformed the general market.

Zacks Equity Research: QCOM www.zacks.com Page 11 of 11