This post is part of a 12-article feature on the best bets for investing in China. To see all the other recommendations in this special report, click here.
"The rollout of China's 3-G cell-phone network offers huge potential for Qualcomm (NASDAQ: QCOM)," suggests Richard Moroney in the blue chip advisory, Dow Theory Forecasts.
"Third-generation networks offer higher download speeds for phones that browse the Internet and download songs and movies.
"With only a hint of a 3-G network currently in place, the Chinese government decided to provide $40 billion to telecom companies to develop network infrastructure.
"As the infrastructure translates to cell-phone purchases, Qualcomm is likely to be a major player, selling its microchips to mobile-phone makers.
"In addition to China, the company has exposure to other emerging markets that leave it well-positioned to capitalize on worldwide mobile-phone growth over the next several years.
"Qualcomm will pay $891 million over four years to settle a long-running patent dispute with Broadcom and preserve a business model that generates 90% of licensing revenue from patent royalties.
"The settlement resulted in a $748 million pretax charge in the March quarter, leading to a loss of $0.18 per share, versus a $0.47 profit in the year-earlier period.
"Excluding the charge, operating income fell 9% on a 6% decline in sales. Looking ahead, Qualcomm cited strong demand for wireless telecommunications chips in emerging markets, raising sales guidance for ? scal 2009 ending September. Qualcomm is a Long-Term Buy."
Steven Halpern's TheStockAdvisors.com offers a free daily overview of the favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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