According to foreign media reports, Qualcomm lost its magic on Wall Street. The company's share price has stalled in the past five years, while shares in other tech companies are on the rise.
According to media exposure last weekend, Qualcomm's gloomy performance on Wall Street made it a potential acquisition target for Broadcom and others.
Meanwhile, activist investors have been calling for the company to split.
Qualcomm shares, revenue and profit growth lagged behind rivals such as Intel over the past five years
Over the years, Qualcomm has been staged on Wall Street magic, revenue and profit soared. One obvious reason is that Qualcomm is at the right time in the right business (wireless technology), which allows it to benefit from one communications trend after another. Its innovative products became the industry standard, making it the only "toll-taker" for virtually every smartphone maker in the world.
This explains why the company has been able to achieve exceptionally high operating margins over the past two decades.
However, over the past five years, Qualcomm's magic has gradually disappeared, its revenue and earnings growth declined, while operating margin was compressed.
In fact, Qualcomm's margins and revenue have been shrinking in recent years.
So far this year, Qualcomm and General Display Company's operating margin and revenue comparison
2015 Qualcomm and General Display Company operating profit margin and revenue comparison
As can be seen from the figure, Qualcomm's revenue and operating profit margins are declining, while General Display Company's revenue and operating profit margins are on the rise.
What is the reason for Qualcomm's recession? The first is the competition from MediaTek and Samsung, which started using their own chips in the new smartphones. In addition, Qualcomm's patent licensing fees in China have become harder after it was fined nearly $ 1 billion by Chinese regulators and ordered to amend the patent licensing arrangements in this key market.
Then the brain drain, Qualcomm in large scale layoffs in recent years, lost the talent needed for competition.
Qualcomm even faces more serious problems. It's hard for the company to bring "the next big event" to win the competition and get new royalties.
To be fair, there is not enough promising new things worth the Qualcomm put a lot of resources to compete with its core business. This is what business strategists call "the dilemma of innovators."
So, there is not much time left for Qualcomm to prove itself on Wall Street. At current valuations, the company can easily become the target of others acquisitions, or be split.