Qualcomm up after rumor of Broadcom interest

Nov 04, 2017, 00:55
Qualcomm up after rumor of Broadcom interest

Qualcomm's shares have been trading in the low $50s for much of this year - down about 15 percent because of its fierce legal battle with Apple and hefty fines/lawsuits from anti-monopoly regulators in the U.S., South Korea and Taiwan.

No final decisions have been made and there is no guarantee a deal will go ahead.

Formerly known as Avago Technologies, Broadcom Limited was created a year ago after Singapore-based Avago acquired Broadcom Corporation for $37 billion.

The reports came one day after Tan held a news conference with President Trump to announce that Broadcom, now based in Singapore with a primary US office in San Jose, plans to move its corporate domicile to the United States. The company already lists San Jose as a corporate co-headquarters. Shares are down almost 16% this year due to legal battles with Apple and the loss of royalties from Apple and an unnamed second licensee.

That gave Qualcomm a current total market value of $91 billion.

Its competitor Qualcomm finds itself in a weakened state. Since then, though, smartphone sales growth has slowed and Intel has succeeded in placing its modems in some iPhone models. A subsequent report in the Wall Street Journal said the bid could come as early as this weekend.

At issue are the licensing fees that Qualcomm charges for patents that cover the basics of how mobile phone systems work. Regulators are still reviewing Qualcomm's $38.1 billion proposed acquisition of NXP Semiconductors for $38.1 billion.

Aside from the financial challenges of such a large deal, Broadcom would also encounter close regulatory scrutiny.

Based on 2016 revenue, the enlarged company would be the world's third-largest chipmaker behind Intel and Samsung Electronics.

Qualcomm may soon be extended a way out courtesy of Broadcom, which itself supplies Apple with Wi-Fi and Bluetooth combo chips.

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