Qualcomm Inc. jumped the most in more than four years after it signed a patent license agreement with Chinese phone maker Xiaomi Corp., taking it a step closer to solving issues that have dogged its most profitable business.
And in the eyes of CNBC’s Jim Cramer, that easily makes Qualcomm stock “a buy.”
"They signed a deal with Xiaomi … that is going to pay them for 3G and 4G. Everybody is going to fall on the line of Xiaomi. This is the beginning of the move that the activists wanted,"
Cramer said on "Squawk on the Street."
"Qualcomm's a buy, even up here," Cramer said.
The
shares gained 5 percent, or $2.55, to close at $51.85 Wednesday in New York, after earlier rising 8.4 percent to $53.44, their biggest intraday increase since November 2011. Qualcomm had declined 34 percent this year through Tuesday’s close.
Qualcomm’s technology licensing business, which contributes the majority of corporate profit, has been hurt by underpayment in China, a consequence of an antitrust investigation in the world’s biggest phone market,
Bloomberg reported.
After paying a fine to settle the case, the U.S. chipmaker has struggled with what it has called tough negotiations with phone makers to get them to pay what they owe for use of patents covering the fundamentals of all modern mobile phone systems.
The deal will allow Xiaomi to develop, manufacture and sell next-generation mobile devices in China, the company said Wednesday in the statement. Qualcomm now has complete agreements with four of the top five phone makers in that country, according to Stacy Rasgon, an analyst at Sanford C Bernstein, leaving it in talks with Lenovo Group Ltd.
“Qualcomm is committed to the success of its partners in China as they continue to grow their businesses,” Derek Aberle, president of the San Diego-based chipmaker, said in a statement.
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