By Ted Greenwald 

For some chief executives, fending off an unwanted takeover is a chance to declare victory. For Qualcomm Inc. CEO Steve Mollenkopf, the end of one fight has only left him facing several others.

Mr. Mollenkopf not only has to fix disputes with customers that predate Broadcom Ltd.'s hostile bid, he now also has to assuage shareholders unhappy with how Qualcomm handled the four-month takeover battle. On top of that, former Qualcomm Executive Chairman Paul Jacobs has embarked on his own takeover bid that, while a long shot, could trigger new tumult.

Qualcomm's plan, as pitched to investors during the Broadcom fight, hinges on several hard-to-predict pieces falling into place over the next year.

The company promises to deliver adjusted earnings of between $6.75 and $7.50 a share in fiscal 2019 -- roughly double Wall Street's current estimate of $3.76 for that period, according to FactSet. That is premised on Qualcomm's completing its slow-moving purchase of Dutch chip maker NXP Semiconductors NV and settling its patent-royalty disputes with Apple Inc. and Huawei Technologies Co., among other things.

If investors believe Qualcomm can meet its goals for next year, it would make the stock worth $85 to $90 a share today, discounting for the risk of failure, said Mike Walkley, an analyst at Canaccord Genuity Group Inc.

Shareholders are showing doubt: Qualcomm's stock ended Friday at $60.62 a share, down 3.5% from before President Donald Trump blocked Broadcom's proposed deal last Monday and far below the $79 that Broadcom was offering.

"I was hoping a deal would go through, and Qualcomm would become Broadcom's problem," said Tom Herzig of investment firm P.R. Herzig & Co. "Now it seems to be my problem." Mr. Herzig's firm has about 2.5% of its portfolio in Qualcomm stock, which he said he plans to hold despite his concerns over whether management eventually can reignite the shares.

Shareholders will get another chance to register their opinion on Friday, at Qualcomm's annual meeting. Institutional Shareholder Services Inc., an advisory service that had urged shareholders to push for negotiations between the two companies, on Wednesday recommended that Qualcomm shareholders show their discontent by voting for four of Broadcom's candidates -- even though such votes won't be counted -- and none of the incumbents.

A possible bid from Mr. Jacobs, who was Mr. Mollenkopf's predecessor as CEO and is the son of Qualcomm co-founder and former leader Irwin Jacobs, further clouds the situation.

"There are real opportunities to accelerate Qualcomm's innovation success and strengthen its position in the global marketplace," Paul Jacobs said in a statement Friday. He said taking the company private makes sense because taking advantage of the opportunities is "challenging as a stand-alone public company."

The buyout suggestion, widely seen as having little chance of success, stirred discord on the board, which on Friday said Mr. Jacobs wouldn't be renominated as a director at this week's shareholder meeting.

Qualcomm declined to comment or to make Mr. Mollenkopf available. The company said in a statement Friday that it is "focused on executing its business plan and maximizing value for shareholders as an independent company."

An understated engineer who joined Qualcomm more than two decades ago, Mr. Mollenkopf, 49 years old, has presided over a difficult period. Qualcomm has battled not only with some of its biggest customers but also with regulators around the world, including the U.S. Federal Trade Commission, which sued it last year alleging anticompetitive practices. Apple and Huawei have been withholding revenue, which crimped Qualcomm's profit last year, and its shares are down 18% since Mr. Mollenkopf became CEO four years ago.

Mr. Mollenkopf is counting on NXP to supercharge Qualcomm's ability to sell chips for cars, security and internet-connected devices -- combined markets he has said could be worth $77 billion by 2020. He has said he expects Qualcomm's leadership in next-generation cellular technology to be a big advantage in those areas.

Qualcomm initially expected the $44 billion transaction, announced in late 2016, to close by the end of 2017. But the deal has been held up in antitrust review in China, and its prospects for approval have been clouded by rising trade tensions with the U.S. -- and potentially by the Trump administration's treatment of Qualcomm as a sort of national champion in the U.S.'s competition with China.

Also critical for Mr. Mollenkopf is settling the disputes with Apple and Huawei in a way that doesn't hobble Qualcomm's highly profitable intellectual-property licensing business, which collects royalties on nearly every smartphone sold because it holds key patents on cellular technology.

Qualcomm's 2019 forecast includes between $2.5 billion and $4 billion in payments it assumes would flow from resolving its customer disputes. It leaves out a further $5 billion to $7 billion in so-called catch-up payments that Qualcomm has said Apple and Huawei will owe by then for royalties they have withheld.

Qualcomm has said it is confident it can resolve the disputes. It is making headway with Huawei, which also stopped paying royalties. In January, it announced a patent-licensing agreement with Samsung Electronics Co. that strengthens its position against Apple, some patent lawyers said.

Write to Ted Greenwald at Ted.Greenwald@wsj.com

 

(END) Dow Jones Newswires

March 19, 2018 07:14 ET (11:14 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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