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Gabelli Funds portfolio manager Howard Ward and Option Pit Mentoring and Consulting’s Mark Sebastian on Qualcomm’s first-quarter earnings and outl...
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Perfect person talk about Qualcomm Howard ward is Gabelli funds portfolio manager and director of growth equities and Howard you -- the perfect person you're focused but a lot of attention on Qualcomm which we mentioned before how it is kind of a proxy for apple because so much of apple products the iPad the -- Have their products in it what do you think -- the market reacting -- negatively after hours to these number.
Well first of all the stocks had a bit of move going into the earning season so we have to remember that and second of all.
It's this is with apple is just really gearing up now I mean.
Qualcomm is it is a customer of apple now but.
It's much more play on Smartphones in general so I Smartphone penetration increases android's.
Android's -- could be about Qualcomm is that their equipment they're chips are just about all of the different kinds of Smartphones and so Smartphones about 30% of the market now.
Rising to something north of 50% over the next two to three years.
They're gonna capture a lot of that also in the tablets -- know the Talbots is only.
200 million or so tablets made today that number's gonna go up a lot in the years ahead and call comes going to be a lot of -- lot of these devices.
Three G -- G this CDMA technology which is they're signature.
Technical achievement is going to be increasingly used as we roll from three -- to forgy and so did the outlook for call come -- should be very bright -- Get them to raise guidance -- yeah.
Is speaking of that let's go back to -- because of course guidance is one of the key issues.
A lot of analysts are late listening closely for what they say about the rest of the year with the iPhone 5 coming on.
Are you hearing anything about guidance or what more color are you getting from this earnings report it -- looks like the latest that we're seeing here is that Qualcomm is narrowing their full year 2012 guidance which could explain the drop in the stock that we're seeing.
In after hours trading -- -- -- three dollars 41 cents a share.
Three dollars 41 to 356.
Of that of course lower than their original call there.
Secondly that could explain the drop there were seeing in stock right now that's still digging through.
Let's go back to market Sebastian if we could for second -- -- is a very well positioned stock if you think that there's gonna be a phone boom here there's a Smartphone boom.
But what happens if -- risen -- Well it looks like fifth -- this earnings was a big disappointment.
After the pricing got about a 5% move one way the other and it's moving I don't closer to seven -- half percent.
-- there's not a Smart phone bill and then all those apple valuations.
I have apple trading a thousand -- and and a trillion dollar company.
You know those goals away of the Dodi Al and I think that could be a real problem for -- for these.
People that are aggressively aggressively long apple.
And there is a large constituency.
That is aggressively long apple now and I don't think apple is -- -- 450 anytime soon.
But I think that huge bull ride.
All of -- -- there are expecting a -- run up to 75800.
Not earnings next week should maybe temper those hopes a little bit I wouldn't.
Excited after a while comes announcement today.
-- look at the -- -- there in the after hours right now you could see the stock is getting hammered do you think this is just the guidance or is there more in there.
You know I got to see more of the release I'm not sure what they're talking about the mean for the fiscal year the streets looking for.
377.
And earnings that makes me think that maybe there's some differs between.
GAAP and non-GAAP earnings -- might there might be some noise in there that's causing some confusion -- just like there was confusion when we had the Google numbers and there's all this talk about a dividend well we're really wasn't a dividend it was a stock dividend which -- which is entirely different.
So I'd like to see the full release and but but let's let's be mindful that earnings season is gonna be the most typical earnings season we have had in what is -- recovery which now.
Nearly three years old.
So -- -- we got sluggishness in Europe China slowing down companies have cut cost of the bonds -- profit margins are probably peaking.
This will be a reality check this is what we're experiencing right now that's why -- say Howard we're being held hostage to the earnings are -- are.
Your right on the money and specifically on the money over overall how it is a Qualcomm is now affecting other stocks let's look at -- Whether there -- coattails to what happened at Qualcomm look at apple after hours it also getting hit not back tremendously here for just a little bit of a pullback just a little bit of a reality check.
Again Howard you see more of a correction we've already had about a 4% correction but you -- more -- correction correction coming ahead maybe this is supported that.
Well this is the catalyst forward -- do believe that's that's the case of the market bottom last first week and October we had a correction in November no real correction six since we had a 29% advance.
And and that interestingly enough -- -- 47 weeks you know right up until last week the economic data was better than expected all of a sudden economic data wasn't better than expected and we had a down week.
And so things have become more difficult they're not terrible this is a 2% growth economy that's not a great economy but it is moving forward the payroll number that we'll get a couple.
