Qualcomm (QCOM -1.84%), the world's leading vendor of mobile-oriented chips and one of the most successful wireless patent holders, reported fairly timid results in its earnings release on Jan. 29. Interestingly enough, despite these "disappointing" results, shares of the company were actually up north of 3% (and near 52-week highs) following the report. This action means only one thing: Investors were really scared.

Digging into the numbers
Qualcomm reported fiscal first-quarter revenue of $6.6 billion (up 10% year over year), which was a slight miss from the midpoint of sell-side estimates of about $6.7 billion (but nothing too extreme). On the bottom line, strong expense/cost control actually drove earnings per share of $1.26, representing an $0.08/share beat against sell-side consensus. This was mostly fine, but what was really interesting was the guidance.

For its  fiscal Q2, Qualcomm guided to $6.1 billion-$6.7 billion and earnings per share of $1.15-$1.25, which represents a pretty sizable miss from sell-side consensus of $6.7 billion and $1.26/share. Now, to be perfectly fair, Qualcomm actually upped full-year EPS guidance to $5-$5.20 from $4.95-$5.15 on a non-generally accepted accounting principles (i.e. excluding share-based compensation) basis, reflecting tighter expense management and a revenue picture that is more back-half loaded.

One concern for Broadcom
On Qualcomm's call, the company had the following to say with respect to its latest-and-greatest 802.11ac connectivity solutions:

Our overall Wi-Fi sales are strong and growing, with unit sales this quarter up 50% year over year, and we have over 200 designs of our premium 802.11 AC solution in the pipeline. Our RF 360 family of products also continues to progress well. 

Broadcom (NASDAQ: BRCM), on its recent call, had the following to say about this claim:

I don't know whether that's the correct number or not, so I'll decline to challenge that. We certainly have focused on the high-end phones, and high-volume phones, and I think Broadcom has done a great job of winning the key phones in the market. And I expect to see continued strength over the course of this year.

Interestingly enough, it looks as though Qualcomm is gaining some pretty serious traction in the mainstream/higher-volume segments of the Wi-Fi/connectivity market, while Broadcom seems to be more focused on the high end. In light of the fact that the high-end handset/mobile-device market seems to be slowing while the more mainstream/value devices continue to soar, this could become a pain point somewhere down the line.

Of course, the offset here is that Broadcom is taking share with its complete turnkey solutions (e.g., apps processor, cellular modem, connectivity), which implies that the net flow of dollar content share in handsets could still be in Broadcom's favor (given Qualcomm's domineering position here), although only time will tell.

Foolish take
Qualcomm continues to be a high-quality company that continues to execute well in capturing the enormous smartphone opportunity in front of it. While competition in the smartphone-chip market intensifies over the next couple of years, Qualcomm Technology Licensing should remain more than robust, and the chip business is still likely to grow even in light of share loss to the likes of Broadcom and Intel. The best way to sum Qualcomm up is this: It's a great "GARP" (growth at a reasonable price) stock in the semiconductor sector.