MediaTek's quarterly earnings look like crap... So glad I'm no longer part of the chip business mess.
http://blogs.barrons.com/asiastocks/2015/08/02/wrestling-with-qualcomm-is-expensive-mediateks-profit-tanks
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Buybacks ARE innovative
Innovate Qualcommers, innovate... Instead of being dismayed by the filth on this board.
Maybe some of you finally are getting it? That's this wireless chip business is going to get a lot worse. And competing on cost, you can bet those QCT jobs aren't going to stay here in the U.S. Argue all you want about H1-B's. But if I were you, I'd worry less about the H1-Bs and more about the Q moving the entire department abroad.
For those of you too lazy to go to that article: "This (earnings result) reflects the competitions between Qualcomm/MediaTek is much worse than one had anticipated. As Qualcomm is squeezed out from the premium segment (by Apple and Samsung), it only left with low-to-mid end market which is the traditional “bread and butter” for MediaTek. Confronting with slower market, shrinking merchant market and little cost and feature differentiations, price cutting seems to be the only avenue to gain share but this comes at expense of profit margin.
Qualcomm has responded with more aggressive new production offering in 2H – new features with lower price points (S425/620). This is to counter MediaTek’s third gen of LTE portfolio (6731/51). The relentless pursuit of product improvement with lower ASP has to make one wonders what is the end game? In addition, MediaTek has spent heavily on the premium segment (USD300-500) – introducing three APs (Helio X10/20/30) using 28/20/16+nm in a span of 24 months. But the addressable market for this segment is estimated to be less than 200m (mainstream is >800m units) and Qualcomm has strong grip with many international OEM customers and is head in design and geometry. We wonder if MediaTek can really recoup its investments.
In addition, MediaTek paid heavy price by building up inventory aggressively. Inventory exiting 2Q amounted to USD1.1bn – an all-time high. This translates to DOI of 121 days – also an all-time high. To put things in perspective, Qualcomm had inventory worth USD1.6bn and sales of USD3.8bn in 2Q and its DOI was less than half of MTK. The sizeable inventory took heavy toe on MediaTek’s cash flow and to less extend profit margin. For the first time, MediaTek’s operating cash flow turned negative in 2Q and 1H FCF was also negative - pretty unusual for IC design firm."