Qualcomm (QCOM): Double Trouble, Time For CEO To Go

August 11, 2007 by Douglas A. McIntyre

It was hard to imagine that things could get worse for Qualcomm (QCOM) but they have. The company announced strong earnings this month and guided higher, but all of the other news around the firm was bad.

The White House refused an appeal of the International Trade Commission’s decision to bar imports of handsets with Qualcomm’s technology because the chips inside violated some of Broadcom’s (BRCM) patents. Verizon (VZ) took a license directly from Broadcom so that it could get phones into the US.

Nokia (NOK), Qualcomm’s largest customer, moved some of its chip sourcing to ST Microelectronics. Nokia has been fighting with Qualcomm over license fees.

Yesterday, a federal judge doubled the damages due Broadcom on three patents that Qualcomm violated. That would put the amount at about $40 million.

Qualcomm’s greed and its unwillingness to listen to either the courts or its customers has now cost the companies investors enough. Qualcomm’s share are down over 15% in the three months, and, if  legal and customer decisions keep running against the company, that will get worse.

The company needs new management and a fresh start. It is time for CEO Paul Jacobs, the son of the founder, to go.

Douglas A. McIntyre

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