Qualcomm says it will lose two big customers if acquired by Broadcom

Qualcomm says it will lose two big customers if acquired by Broadcom
Last Thursday, we told you that Qualcomm had rejected Broadcom's $121 billion offer to buy the company. The $82 a share bid includes $60 in cash and $22 in Broadcom stock, and reportedly features a higher than average break-up fee. This is a cash settlement that Qualcomm would receive in case U.S. regulators decide not to clear a transaction between the two chipmakers. In a published letter from Qualcomm Chairman Paul Jacobs to Broadcom president and CEO Hock Tan, Jacobs mentioned two things that prevent Qualcomm from agreeing to the deal. One is valuation, and the second is "deal certainty."

Qualcomm believes that it is worth more than $121 billion, especially in light of its nearly completed purchase of NXP Semiconductors NV for $38 billion. In his letter, Jacobs says that both companies should discuss the pricing of the transaction during a face-to-face meeting between the two firms. As for "deal certainty," Jacobs' letter states that Qualcomm would be "enormously and irreparably damaged" if it agrees to the Broadcom transaction and regulators decide not to sign off on it. Broadcom believes that it has addressed this issue by including the aforementioned break-up fee.

Yesterday, Qualcomm filed documents with the SEC related to its rejection of Broadcom's bid. The filing notes that two companies responsible for $1 billion in chip revenue said that they would probably stop doing business with Qualcomm if it is acquired by Broadcom. The two Qualcomm clients stated that they do not have confidence in Broadcom's ability to be a technology leader.

Despite Qualcomm's rejection of the bid, Broadcom still is continuing with its proxy battle. This means that on March 6th, Qualcomm stockholders get to vote on whether to replace the company's current Board of Directors with nominees submitted by Broadcom. If Broadcom's replacements win, they will most likely approve the $121 billion package, and the deal will be agreed to. Considering that Qualcomm's shares closed the week at $63.99, it seems that investors don't expect Broadcom's proxy battle to succeed.

source: Reuters

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12 Comments

1. Back_from_beyond

Posts: 1418; Member since: Sep 04, 2015

I imagine Samsung would drop Qualcomm, kinda surprised they haven't already.

2. Firenze91

Posts: 206; Member since: Nov 19, 2014

Why can't they just adapt their exynos soc to work on every network?

3. L0n3n1nja

Posts: 1554; Member since: Jul 12, 2016

They can and have before, but to do so they need to pay royalties to Qualcomm. They pay Qualcomm for a SOC in CDMA markets instead of dealing with the cost of manufacturing their own SOC plus pay royalties.

4. cncrim

Posts: 1588; Member since: Aug 15, 2011

Too risk as patent law, why not just pay for it, dont have to work about getting sue.

5. mootu

Posts: 1517; Member since: Mar 16, 2017

They wouldn't get sued, they would just have to pay royalties. Problem is it's actually far cheaper to just use the equivalent Snapdragon than to use the Exynos with very expensive royalty payments on top.

8. Cicero

Posts: 1129; Member since: Jan 22, 2014

Don't forget about that Samsung is producing the Qualcomm soc in their fabs. It's a win-win situation. If Qualcomm cease to Broadcom than this situation can change.

6. ph00ny

Posts: 2029; Member since: May 26, 2011

That's like asking why doesn't sprint and verizon move on from CDMA. It costs too much damn money.

7. Tech-shake

Posts: 213; Member since: Nov 14, 2016

Broadcom is fighting way too hard for Qualcomm. This kinda of attachment for a company makes me little suspicious of the nature of this fight.

9. Trex95

Posts: 2381; Member since: Mar 03, 2013

And soon Apple will drop Qualcomm modems to intel modems.

10. romeo1

Posts: 816; Member since: Jan 06, 2012

I think that quallcom shouldn't let samsung have the 1st batch of top soc's as after the patent rights stop they'll have contributed their own downfall. There could be no reason to use a snapdragon for samsung and if they remain the biggest phone manufacturer qc will lose allot. Instead they should make the playing field even for other manufacturers so theu could gain market share

11. Martin_Cooper

Posts: 1774; Member since: Jul 30, 2013

So Apple is dropping anything that Qualcomm makes for them, big players are going to leave Qualcomm if Broadcom buys them. Samsung in few years will probably be having exynos on all its phones. What the f**k is the purpose of overpaying for Qualcomm when its literally a company that is going to have a hard and slow downfall. And it already is.

12. Trex95

Posts: 2381; Member since: Mar 03, 2013

https://cdn.gsmarena.com/imgroot/news/18/02/samsung-galaxy-s9-exynos-geekbench/-728/gsmarena_002.jpg If this score is true of Exyons 9810 on upcoming S9/S9 plus then Samsung on par with Apple A Soc and soon going to ditch Qualcomm sine there chipset more powerful.

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