Brian Blair of Wedge Partners today came to the defense of wireless chip maker Qualcomm (QCOM), arguing that some parties are too negative about the sales trends at customer Samsung Electronics (005930KS).
Some parties, says Blair, have this week suggested that Samsung handset sales have been trending “a little weaker” for older Samsung models, including the “Galaxy S II,” based on�Google‘s (GOOG)�Android�operating system.
“My take is that we’ve also seen very strong orders from the Galaxy S III, and so it makes some sense that you’re going to see some of the legacy stuff slow down a bit,” Blair said in a telephone call this afternoon.
Blair thinks sales for low-end smartphones in China are not slowing, and that’s an important category for Qualcomm’s baseband chip sales, he asserts.
“People are unfairly beating up the company at $56,” says Blair of the share price. “This is a great place to own for the back half of the year” when he sees Qualcomm chipset sales surging. It’s possible that by Q4, Qualcomm may approach a shipment rate of 200 million chipset units per annum, up from the current run rate of about 150 million, he writes.
Current Street consensus of $19.29 billion in revenue in the fiscal year ending in September may be too low, thinks Blair. He suggests it may go over $20 billion. That means there could be upside to Street consensus of $3.75 per share in profit, he thinks.
Qualcomm shares today are down $2.85, or almost 5%, at $56.09.
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