Optimism for QUALCOMM, Inc. (NASDAQ:QCOM)

QUALCOMM, Inc. (NASDAQ:QCOM) shares are on the rise after a big drop.  An optimistic outlook for the company may help heal investors stung by the drop.  The company plans to buy back more shares than originally slated, increase its dividend and has a CEO that is painting a a more optimism for the future than he did back in January.

(Dr. Stephen Leeb) - QUALCOMM announced that its board authorized the new buyback worth $3 billion. This replaces the $2-billion buyback plan, $1.7 billion worth of shares from which have already been repurchased by the company. In addition, Qualcomm will increase its quarterly dividend by 12 percent to $0.19. Investors, as a result, will be receiving $134.4 million more per year from the company.

Moreover, the company provided a more optimistic business outlook. While back in January, Qualcomm’s CEO, Paul Jacobs, offered a fairly pessimistic view of the company’s prospects for the year, it seems conditions may be improving. Now, the company expects both the revenues and profit for the second quarter to approach the higher end of the earlier forecasts. This seems to indicate that demand for cellphones will be improving in the months ahead, since manufacturing orders for chips come in ahead of orders for other parts.

The market responded strongly, sending the shares higher by almost 10 percent in two days. Qualcomm, which historically trades at a premium to its semiconductor peers because of its large licensing business, is now trading at average valuations, and continues to be a strong recommendation.

Leeb’s full story here.