S&P Assigns 'A+' Rating to Qualcomm (QCOM); Outlook Stable

Standard & Poor's Ratings Services today said it assigned its 'A+' corporate credit rating to San Diego, Calif.-based Qualcomm Inc. (Nasdaq: QCOM). The outlook is stable.

At the same time, we assigned our 'A-1+' short-term rating to the company's commercial paper program.

"Our ratings on Qualcomm reflect its 'strong' business risk profile based on its competitive position in wireless communications semiconductor markets, 'minimal' financial risk profile, and net cash position," said Standard & Poor's credit analyst John Moore.

Our stable outlook for Qualcomm reflects our expectation that the company, over the coming year, will remain in a minimal leverage position and extend its track record of positive revenue and earnings growth, given its favorable position in wireless semiconductor product and technology licensing markets.

A lower rating would most likely be the result of the company's shift from its expected financial policy such that a debt-financed acquisition or shareholder rewards resulted in net debt to EBITDA that exceeded 1.5x on a sustained basis. We would also consider a lower rating if Qualcomm's competitive position was significantly impaired as a result of revenue declines or loss of meaningful market share.

The company's product and client concentrations currently constrain the potential of a ratings upgrade. If Qualcomm can meaningfully diversify its markets beyond wireless device clients while maintaining steady license royalty revenues, we could upgrade the rating.

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