Worst Tech Stocks to Buy: Qualcomm (QCOM)
The mobile revolution continues to grow at a healthy rate. But one of the leaders in this category — Qualcomm, Inc. (NASDAQ:QCOM) — is missing out.
It’s not because Qualcomm lacks innovation and R&D. The real problem is that QCOM’s business model, which relies on licensing its technologies. The complaint? Its arrangements are just too expensive.
QCOM has been the target of multiple legal challenges from South Korea, the European Union and the United States, and every time one of them pops up, the potential consequences are severe. But perhaps Qualcomm’s biggest challenge is from Apple Inc. (NASDAQ:AAPL), where CEO Tim Cook has made clear his disdain for the comm-tech firm’s practices and has launched a $1 billion lawsuit to fight back.
Litigation could take years, but that means an overhang of uncertainty for QCOM, who gets 80% of its pretax profits from the licensing business.