 Good day, fellow investors. The 5G trend is starting. There will be the first applications 2019-2020. By 2022, it's expected that already 40% of the market in the United States will have 5G phones, Internet of Things, cars are more and more communicating with us, data and everything. So it's a very interesting time to look at companies that are exposed to the 5G sector and one of those companies is Qualcomm. So my subscribers on the research platform really are excited about this 5G. They want to be exposed so I said okay let's look into that at more 5G stocks and let's start with Qualcomm. So I'll give you a company overview, Qualcomm's future growth, 5G long-term opportunity and earnings, the 5G product and my current investing opinion on the company. Let's start. Company overview, there are two businesses with Qualcomm. One is the licensing and the other is the semiconductor business. The licensing business is a high margin one that makes two thirds of Ibita. When the NXP acquisition fell through, they went on a crazy buyback program. It didn't help much as the stock didn't go anywhere in the last eight years practically and especially in the last year as they did 22 billion of buybacks and many analysts were expecting that the buybacks will lead the stock price to 90 or 100 but it's not about the buyback and what happened. With the stock it's about what will happen next and here is the issue with Qualcomm and we have to see how will the 5G which is something that will happen next in the next years affect the company. They are really focusing on this antenna modems, automotive, licensing, they have some issues but before that they have spent 53 billion on buybacks in the last 10 years which is 75% of the current market cap. The number of shares outstanding went down 27% from 1.65 billion to 1.22 billion so 75% of the market cap was spent for a 27% decline in the number of shares. I will never understand the logic of the buybacks such buybacks especially but okay they say they are strong financially but they really depleted the cash, depleted the assets, depleted the stockholder's equity with the buybacks, lowered that a little bit so the thing is that I don't know whether this will allow them to weather the cycle they really have to hope on higher cash flows from the 5G trends. The question now is will Qualcomm reach the cash flows levels it enjoyed in the past thanks to 5G and whatever is going on in the internet of things. Over the past six years all of Qualcomm's metrics have been declining from revenue, margins, cash flows, book values whatever it's a really big important decline especially when margins decline so will things turn around possibly but I'm looking for trends that will last forever when I invest really modes and growth and exponential growth that you can build on not a quarter or two good quarters or a few years of good quarters and this is the problem with Qualcomm. Its future they have been guiding for earnings of seven dollars per share in 2019 but things don't look rosy as there are litigations with the trade commission with Apple if they win the royalties will boost Qualcomm's revenues for a while Apple has to pay what 8 billion but they have already switched to Intel modems and making their own chips insourcing Samsung also so it's not really a great deal that if they get the money that it will boost the stock price but they will probably spend it on buybacks that haven't led to anywhere because they haven't been improving the business the 5g opportunity is there analyst estimate growth from Qualcomm based of positive things around 5g to be around earnings 2020 to be around 4.5 in a good scenario then people attach 15 valuation on to that so we are at price of 75 if it hits 7 we are a price of 105 but i think at the current moment much of the stock price has been protected by the latest 22 million buyback and the promise of the new buyback the promise is the following Qualcomm CEO says that snapdragon continues to outperform industry benchmarks and its well positioned to compete with others so we will continue to expand on this expertise with hands and and adjust and other industries to compute internet of things and auto 140 000 patents and okay they expect that as 5g rolls out they will win big however semiconductors it's a commodity so everybody can make it or at least a lot of companies can make it and then it's really a race to the bottom in pricing who can deliver more capacity less energy consumption for a lower price which means that Qualcomm as they are at the forefront will have a year two years three years of great earnings let's say seven ten dollars but the question is always what comes next and that's why you see Qualcomm's stock price stagnating over the last 10 years what comes next what are the necessary investments what is the competition what are the litigations if they lose the trade commission litigation they will lose a lot of royalties probably half of that which would really hit the company also for all the future we don't know what will happen there apple has already decided to not work with Qualcomm Samsung is also insourcing so a lot of risk and a lot of uncertainty and these are the few years of good earnings probably they will hit seven somewhere and then the stock price should go to 100 but it's about what will happen next so for me personal opinion I stick to boring investments that give me much more certainty risk and certainty are something that make Qualcomm more of a bet than of a value investment unfortunate so the risk Qualcomm is sued all over the world for its highly profitable licensing business is it a monopoly or not certainty legal costs will be high risk losing licensing court battles would lower future earnings power risk 5g adoption can be volatile can be highly competitive it's a commodity certainty competitors are not sleeping apple samsung insourcing risk yes qualcomm can make seven dollars in earnings per share in 2021 but the question is what will be next what will be in 2024 as competition ramps up certainty expect volatility in earnings and cash flows thus this is not a value investment certainty they spent 50 billion on buybacks that didn't add value at least not much value so if you want to invest in qualcomm have fun for me it's simply as a value investor it misses the margin of safety because it can really the business can be hit hard by the litigation by the competition by the race to the bottom pricing which is something I do not want to bet on yes the potential is huge but I think given the exuberance in the market it's fairly or even overpriced for the risks thank you for watching sorry to disappoint long qualcomm investors but that's how we are that's what we do we do value investing with a margin of safety so please subscribe if you like boring money making long-term trends see ya