Qualcomm (QCOM) turned in some very impressive numbers. Net income rose 22% to $726 million. The company raised the high end of its fiscal year revenue forecast from $8.6 billion to $8.7 billion.
According to The Wall Street Journal: Paul Jacobs, Qualcomm’s chief executive officer, told analysts that the company had a "very successful" second quarter "despite the attempts by a small number of competitors to disrupt our business." (Read Broadcom)
With all of the cheer, the company’s stock only rose a few pennies after hours to $45.55. It still trades well shy of its 52-week high of over $53.
Why?
First, Wall St. does not like companies who fight with their largest customer. Qualcomm and handset maker Nokia (NOK) have been in a battle over intellectual property and license fees, and that dispute does not seem to be very close to being resolved.
Wall St. does not like firms that have significant IP problems. Qualcomm can play down it patent battle with smaller rival Broadcom (BRCM) but many of the court rulings have gone Broadcom’s way so far. That means that Qualcomm could be sharing some of its lucrative licensing dollars with a competitor.
And, finally, Wall St. does not like nepotism. Paul Jacobs, Qualcomm’s chief executive officer, is the son of the founder, and with all of Qualcomm’s problems investors have to be concerned if an outsider might be better suited to the job.
Good results. No reaction.
Douglas A. McIntyre can be reached at [email protected]. He does not own securites in companies that he writes about.
Top Gaining Stocks
Top Losing Stocks