Apple, Inc.'s (NASDAQ:AAPL) strong quarterly report with significant upside to iPhone units and solid upside to iPad would naturally be viewed as a positive for Apple supply chain companies including Qualcomm, Inc. (NASDAQ:QCOM).
Apple beat expectations for the first quarter due in part to higher than expected iPhone and iPad shipments. Sales of iPhone and iPad more than doubled from last year to 37.04 million units and 15.43 million units respectively.
We think the strong iPhone results represent a more significant positive to QCOM, since they benefit not only from semiconductor sales but also from licensing revenue. AAPL is already QCOM's largest licensee, and based on these results, is distancing themselves from the pack, Susquehanna Financial analyst Chris Caso wrote in a note to clients.
Qualcomm has not yet guided to fourth-quarter licensing revenue, since licensing is reported in arrears. Therefore, the strong quarterly iPhone units will show up in Qualcomm's fourth-quarter outlook for its technology licensing unit.
Further, the strong iPhone units will serve to offset the weaker fourth-quarter results already posted by other licensees including HTC, Sony Ericsson and Research In Motion (NASDAQ:RIMM).
We think AAPL's results demonstrate a pretty clear trend about what is happening with smartphone market share, with AAPL a big winner, added Caso.