QUALCOMM, Inc. (QCOM)

Qualcomm (QCOM - Analyst Report), the largest developer of digital mobile chipsets based on CDMA wireless technology, reported financial results for the second quarter (ended March 29) of fiscal 2009, significantly above our estimates. Despite a challenging economic environment, global demand for 3G enabled mobile products and services facilitated quarterly performance better than the company's own guidance.

We believe the recent legal settlement with Broadcom removes an impediment to higher future licensing sales. Robust growth of high-end smart-phones in developed wireless markets along with 3G network deployments in emerging markets serve as long-run growth catalysts for Qualcomm. We continue to maintain our buy rating with a higher valuation target.

Our longer-term assessment remains in tact as the company maintains a solid net cash position of nearly $14 billion with no debt. Free cash flow generation also remains impressive and increases in dividend payout provide incremental return to shareholders.