(Corrects dividends and buybacks refers to the sixth paragraph to say all of $ 4.1 billion to approximately $ 3.5 billion)
-The author is a columnist for Reuters Breakingviews. -The author is a columnist for Reuters Breakingviews. The views expressed are his own-
By Robert Cyran
NEW YORK, January 5 (Reuters Breakingviews) - Qualcomm (QCOM)(O) performs a thrust of 3.1 billion for gold from the tablet. Giant wireless technology did not much success beyond cell phones. Yet other devices, such as Apple (AAPL).(O) iPad and its competitors are starting to take the technological advance of smartphones. Purchase Atheros Communications (ATHR)(O) gives Qualcomm a way.
Qualcomm became a company of 84 billion, producing chips for mobile phones and licenses of some underlying technologies needed to connect a phone to another. But there is a greater emerging opportunity. Devices that were once wired, like most computers and fixed are increasingly mobile. And new gadgets, such as tablets and electronic readers, proliferate.
Atheros, conversely, is Wi - Fi chips and other kinds of processors which connect devices locally. But smartphones and tablets as long-distance and local connectivity needs. So for Qualcomm, aspire Atheros means that it should be able to make a smart 4 G connectivity of cell phone and Wi - Fi. This integration of multiple tasks is often a recipe successfully for the bulk of sales, higher margins and increased market share.
Fortunately for Qualcomm, its foray doesn't come with too high a price. It paid about 22 times estimated earnings for 2011 Atheros. Which is consistent with the average price-to-earnings ratio of five Atheros, according to the Barclays.
That said, it's fusion of Qualcomm so far greater effort. And deals with greater may lead to indigestion and distract management headaches. In addition, the company had more than 20 billion of available dry powder before the agreement, so that there could be more ambitious future mergers.
However, Qualcomm deserves the benefit of the doubt for the moment, given its strong performance in the long term and the record of the return cash to shareholders. In the fiscal year ending in September, for example, the company distributed all of $ 4.1 billion to fund produces its operations of return to shareholders in the form of dividends and stock buybacks.
As long as this discipline holds, most recent purchase of Qualcomm has all chances to prove a smart bet on a market which is explosive upward mobile.
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CONTEXT NEWS
-January 5, Qualcomm said that he had agreed to acquire Atheros Communications for $45 per share in cash, a $ 3.1 billion enterprise value. The price represents a premium of 22 percent January 3 closing price, the eve of the news of the impending fusion have emerged.
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