Foolish Forecast: Qualcomm Survives and Thrives

San Diego-based wireless technology developer Qualcomm (Nasdaq: QCOM  ) is set to deliver its fiscal fourth-quarter results after market close on Thursday. Let's review where things stand with the communications giant.

What analysts say:

• Buy, sell, or waffle? Of the 27 analysts covering Qualcomm, 22 say buy, four say hold, and one says sell. Qualcomm ranks as a three-star stock (out of a possible five) in the Motley Fool CAPS community, based upon the views of 895 investors who logged an opinion.
• Revenues. The average analyst is looking for nearly 13% quarterly sales growth, to $2.26 billion.
• Earnings. Profits are expected to rise to $0.53 per share.

What management says:
Even in the face of legal spats with Broadcom (Nasdaq: BRCM  ) and Nokia (NYSE: NOK  ) that drag on and on, Qualcomm's business is humming along nicely, as management bumped up guidance for the quarter back in late September. CEO Paul Jacobs explained what's fueling its earnings fire, including "greater than expected demand for our WCDMA and 1xEV-DO chipsets that enable high-end, feature-rich products." These are the types of cool new gadgets that Broadcom was hoping to ban from import into the U.S., before Sprint Nextel (NYSE: S  ) , AT&T (NYSE: T  ) , and Verizon Wireless -- a joint venture between Verizon Communications (NYSE: VZ  ) and Vodafone (NYSE: VOD  ) -- were relieved of the threat through a variety of measures.

What management does:
While demand for Qualcomm products remains strong, expenses for R&D and the ongoing legal defense have stamped a sad face on the margin picture. Should the company manage to settle some major lawsuits, margins should improve appreciably.

Margins %	3/05	6/06	9/06	12/06	3/07	6/07
Gross	71.3	71.3	71.0	70.5	70.5	70.3
Operating	39.0	38.1	36.0	33.9	33.3	32.7
Net	35.6	33.8	32.8	32.0	32.1	32.5

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Qualcomm continues its rollercoaster ride through the litigation funhouse, with investors hanging on for each new development on the legal front. Most recently, the company courted Donald J. Rosenberg from Apple (Nasdaq: AAPL  ) to take the spot of general counsel, after longtime head lawyer Lou Lupin resigned. It will be interesting to see whether the changing of the guard, and the new approach management claims it is taking toward its courtroom and regulatory agency battles, yields more positive results. In the meantime, though, it's nice to see that Qualcomm's business is capable of withstanding the legal blows.

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