Yesterday, the board of directors of Qualcomm Inc. (QCOM - Analyst Report) raised the quarterly dividend rate by 40% from 25 cents per share to 35 cents per share, effective immediately. The new annualized dividend will be $1.40 per share.
The board also replaced the company’s existing $4 billion share repurchase program with a new $5 billion program. Approximately $2.5 billion of stock repurchase authority is still remaining in the existing share buy-back program.
Qualcommhas firmly established its leadership position in the high-end smartphone segment. The company is the majorbeneficiary to the significant growth of 3G wireless technologies and smartphones in the emerging markets, China in particular. The next-generation 4G Long Term Evolution (LTE) technology has also boosted Qualcomm’s market position. The company becomes the major chipset vendor for global smartphone giants, such as Apple Inc. (AAPL - Analyst Report), Samsung and HTC.
We believe the company’s decision to enhance its shareholder wealth is clearly indicating management’s confidence of the future growth despite facing stiff competition from NVIDIA Corp. (NVDA - Analyst Report) and Broadcom Corp. (BRCM - Analyst Report).
At the end of 2012, Qualcomm had more than 225 royalty bearing licensees throughout the world. Further, the company has over 40 single-mode OFDMA licensees. More than 450 Snapdragon-based devices are in the pipeline and over 100 devices are based on the company’s Reference Design solutions.
Qualcomm has announced its next-generation processors called Snapdragon 600 and 800. These chipsets will provide 40-75% increased performance over the S4 Pro series and are the first chips operating on TSMC 28nm technology.
Management raised its previous outlook for fiscal 2013 due in large part to the growing adoption of 4G LTE networks in North America, rapid transition from 2G to 3G in China and India, and increasing licensing revenue.Qualcomm currently has a Zacks Rank #2 (Buy).