text: Qualcomm's Headed the Wrong Way -- The Motley Fool
  Qualcomm's Headed the Wrong Way
  Next up: Qualcomm (Nasdaq: QCOM). Is the executive team of this wireless telecom company doing all it can to earn you outsized returns?
  Total ratings 2,083
  Percent bulls 94%
  Percent bears 6%
  Bullish pitches 270 out of 293
  Data current as of Jan. 23.
  Qualcomm is the inventor of the CDMA technology upon which Verizon's (NYSE: VZ) wireless network is based. So it should be no surprise that analysts believe Big Red's edition of the iPhone will be based on Qualcomm technology, joining a veritable army of Android devices already using the company's chips.
  "The one certainty investors can bank on is that small, mobile, connected device demand will continue surging ... And there's one company that is perfectly positioned to profit immensely from that certainty," wrote my Foolish colleague Eric Bleeker in announcing Qualcomm as a buy for the Fool's "11 O'Clock Stock" portfolio.
  Dr. Paul Jacobs, Chairman and CEO 21 $4,524,144 1,479,088
  Steven Altman, President 22 $2,035,014 132,088
  William Keitel, Chief Financial Officer 15 $1,620,010 8,371
  Source: Capital IQ, a division of Standard & Poor's. Data current as of Jan. 23.
  Good news, Qualcomm's top executives have a lot of history with the company. CEO Jacobs also controls more than $75 million in stock. (Though, to be fair, that amounts to just 0.09% of the shares outstanding.) As a group, insiders own 1.42% of the company.
  Management analysis versus competitors and peers
  Broadcom (Nasdaq: BRCM) 0.24% 50.8% 10.7% 19.9%
  Intel (Nasdaq: INTC) 0.05% 66.1% 20.8% 25.6%
  Nokia (NYSE: NOK) 0.07% 31.9% 8.5% 16%
  Qualcomm 1.42% 68% 9.6% 15.8%
  Texas Instruments (NYSE: TXN) 0.30% 53.6% 27.1% 29.9%
  Anyone else surprised by the data in this table? I'd expect the high gross margins that result from Qualcomm's royalty business to drive industry-leading returns on capital and equity. Yet capital-intensive Intel and Texas Instruments outperform Qualcomm in both areas.
  Looking at the historical trend, management's record in all three metrics has deteriorated in recent years. Gross margin checked in at 71% in fiscal 2006. ROC came in 13.8% and ROE 20.1% the same year. While this decline in returns corresponds with Qualcomm growing its lower margin (relative to royalties) chipset business, the company has also moved into non-profitable areas like its Flo TV misadventure that ruined shareholder capital. I'd advise taking a closer look at what's behind the downtrend before committing new investment dollars to this stock.
  Do you agree? Disagree? Let us know what you think about Qualcomm in the comments box below. You can also recommend other stocks for me to evaluate by sending me an email, or replying to me on Twitter.
  Interested in more info on the stocks mentioned in this story? Add Broadcom, Intel, Nokia, Qualcomm, or Verizon to your watchlist.
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  The Motley Fool owns shares of Qualcomm, Texas Instruments, and Intel, in which it also has a call options position. The Fool is also on Twitter as @TheMotleyFool and its disclosure policy always manages to make ends meet.