Hostile Takeover: Can Qualcomm Fend Off Broadcom?

When Broadcom proposed ousting Qualcomm's board of directors on Dec. 4, it set in motion a high stakes chess match for control of San Diego's most iconic technology company.

The outcome could reverberate not only locally but throughout the tech industry -- possibly changing the landscape for firms ranging from Apple to Google, Microsoft to Intel.

Qualcomm invented technologies that manage cellular communications in every smartphone. Rival Broadcom's hostile takeover bid -- launched after Qualcomm's board rejected its $70 per share offer in November -- looks like it will play out relatively quickly.

Qualcomm's shareholders will vote on either Broadcom's nominees or Qualcomm's slate of candidates by the company's March 6 annual meeting.

Strategies in this fight remain unclear. Both companies are being cagey about potential moves.

But analysts say Broadcom has the ammunition to raise its price for Qualcomm -- perhaps as high as $100 per share -- and still come out with a deal that contributes to earnings.

If Qualcomm's board hopes to fend off Broadcom, analysts believe it must wrap up its slippery acquisition of automotive/Internet of Things chip maker NXP Semiconductors, which would make Qualcomm less dependent on smartphones.

It also may need to consider new ways to mend its troubled patent licensing division and raise the specter of stiff regulatory resistance to a Broadcom/Qualcomm marriage.

All that, plus tout its leadership in the massive market opportunity from new, ultra-fast 5G mobile networks, where Qualcomm has been investing in core technology for nearly a decade.

"We are probably the best positioned company for 5G and the connected world," said Chief Executive Steve Mollenkopf at a recent Economic Club of Washington, D.C., event. "We are sitting in a momentary spot where our revenue is a little bit difficult to model because of these licensing disputes. But those will get resolved, and what you'll see is a...

Comments are closed.