Broadcom Wants Qualcomm, But Would Takeover Strangle Innovation?

For well over a decade, Qualcomm has been the research and development engine driving advances in cellular wireless. By making big bets on technologies years ahead of time, it created inventions that now enable streaming video, street-by-street directions, photo sharing, longer battery life and a host of other features found on nearly every smartphone on the planet.

If Broadcom succeeds with its bold $103 billion takeover bid to acquire Qualcomm, would it continue the practice of pursuing long-term research on the next big innovation that pushes the mobile technologies forward?

An increasing number of analysts don't think so. It is not the way Broadcom Chief Executive Hock Tan has run his companies over the years.

"He optimizes everything around efficiencies," said Jim McGregor, principal analyst with Tirias Research. "He is an investor. The philosophy he is taking is: We don't invest in research and development. We buy it."

Broadcom's effort to acquire Qualcomm -- which could be headed for a hostile proxy fight for control of Qualcomm's board of directors -- would attempt to meld it to very different business models and cultures around innovation, say analysts.

"You have the risk takers, and then you have the ones that let the market play out and then go in," added McGregor. "It's a more conservative approach. I'm not saying it's bad. It just doesn't help with innovation. It doesn't drive the market."

Making that marriage work without destroying what makes Qualcomm valuable could be difficult. It would be like attempting to build a clock with two completely different sets of parts -- one geared toward turning the hands clockwise and the other designed to spin the hands in the opposite direction, said Olivier Blanchard, senior analyst at Futurum, a technology strategy and research firm.

"Qualcomm invests in stuff that doesn't have to be profitable for a while," he...

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