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Qualcomm Signs 5G Global Patent License Deal With HMD Global

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Qualcomm Incorporated (QCOM - Free Report) recently announced that it has reached a direct global license agreement with HMD Global Oy to cover Nokia branded devices, produced by HMD Global. Per the deal, Qualcomm will offer royalty-bearing patent licenses to HMD Global for developing, producing and marketing branded 3G, 4G and 5G single-mode and multimode devices.

Notably, the addition of HMD Global as its new 5G licensee will enable Qualcomm to strengthen its leadership position in 5G, chipset market and mobile connectivity. Qualcomm’s best-in-class security, state of the art processor will aid HMD Global customers in getting regular Android updates quicker than other processors. As a matter of fact, Qualcomm’s advanced cellular technology will allow HMD Global to launch 5G-enabled smartphone.

This new patent license agreement will take Qualcomm a step closer to gaining a bigger market share in its most profitable licensing patent business.

Our Take

Qualcomm is one of the largest manufacturers of wireless chipset based on baseband technology.  The company has been trying to boost its position in the market with multiple technological achievements and innovative product launches. We believe its improved and upgraded technologies will likely enable various firms to build new and updated products as well as services across the wireless ecosystem to better serve customers.

In the past three months, the Zacks Rank #3 (Hold) company has returned 61.4%, underperforming the industry’s average growth of 18.9%.

However, Qualcomm has been facing challenges from low-cost chip manufacturers. Although the global smartphone market is expected to maintain its momentum over the next three to four years, most of this growth is likely to come from the low-cost emerging markets, which may weigh on the company’s margins.

Stocks to Consider

Some better-ranked stocks from the same space are Viasat Inc. (VSAT - Free Report) , Harris Corporation and Motorola Solutions, Inc. (MSI - Free Report) . All these companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Viasat delivered average earnings surprise of 161.56% in the trailing four quarters.

Harris pulled off average positive earnings surprise of 2.98% in the trailing four quarters.

Motorola Solutions delivered average earnings surprise of 9.07% in the trailing four quarters.

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