1 Reason to Buy Qualcomm Stock, and 1 Reason to Sell

Qualcomm (NASDAQ: QCOM) investors heaved a sigh of relief after the company beat Wall Street expectations quite comfortably during the recently reported fourth quarter. The chipmaker has been down so far in 2017, losing over 15% of its market capitalization. But the latest results seem to have given Qualcomm shares a new lease on life.

The stock was up in the post-earnings action as Qualcomm rounded off a better-than-expected quarterly performance with strong guidance numbers. The company closed the quarter with $5.9 billion in revenue, which was in line with consensus estimates. More importantly, its adjusted earnings per share of $0.92 per share was ahead of the $0.90 per share estimate that analysts were looking for.

Qualcomm investors are celebrating the strong showing of its chip business, which can deliver long-term gains as the company taps fast-growing markets outside mobile. However, investors shouldn't throw caution to the winds as the company's successes are being undermined by the alarming erosion of the royalty business. Let's take a closer look at both aspects.

Source: Fool.com