Qualcomm refused to divide the business, despite the advice of investors, the prosecution of regulators and stagnation
The world's largest microchip manufacturer Qualcomm for six months considered the possibility of dividing the company into two independent businesses.
Qualcomm employs two large divisions - one selling microchips for mobile devices, the other sells licenses for technologies patented by the company. The second direction Qualcomm provides the bulk of the profits. However, in the revenue structure, more than half comes from chip sales.
In recent years, Qualcomm's semiconductor business has grown steadily: the company was ahead of its competitors in the adoption of fourth-generation communication technology, LTE. In late September, the company had $ 31 billion in accounts.
')
So far, Qualcomm has a much better financial position than most other chip suppliers: Qualcomm gets most of its profits thanks to licensing fees for using its patents. But it is precisely this side of the company's business that attracts increased attention of antimonopoly authorities in various countries, including the United States and China. The fact is that many cell phone manufacturers complained to regulators about the dominance of Qualcomm in the market and the very large size of the license fees it charges.
On December 8, the European Commission filed charges of violating antitrust laws. The European Commission believes that Qualcomm has paid its main client for using only its chips. In addition, according to the regulator, Qualcomm tried to force competing company Icera out of the market, selling its products at a price below cost.
Qualcomm faces a fine for each case of violation of the law in the amount of up to 10% of its annual revenue (in 2015 fiscal year, Qualcomm revenues amounted to about $ 25 billion). In addition, regulators may require Qualcomm to change the way they do business.
On November 18, Qualcomm received a report from the Korea Fair Trade Commission (KFTC) and accusations of violating South Korean antitrust laws. In particular, the report states that the practice of licensing Qualcomm patents violates the laws of the country, since the company's patents concern only the hardware component and force partners to license other intellectual property illegally.
Qualcomm does not admit his guilt.
However, last year, the antitrust investigation of Qualcomm's activities in China ended up for the giant in paying a huge fine of almost $ 1 billion.
Some Qualcomm customers, including Samsung Electronics , the largest manufacturer of mobile phones, no longer want to be addicted to Qualcomm chips. Therefore, they began to independently develop similar products.
Against the background of the current situation, the Qualcomm quotes for the year decreased by 37%. In the first half of Qualcomm profits fell sharply. The company has developed a cost reduction plan of $ 1.4 billion.
Investors led by the fund Jana Partners offered Qualcomm to consider the possibility of dividing into two independent companies. The Board of Directors formed a special commission on this issue, which analyzed all possible separation options, including the creation of two fully independent companies and an IPO of a subsidiary with the issue of “tracking” shares. But, as stated, the analysis showed the feasibility of maintaining the current structure, according to Vedomosti.
The Board of Directors came to the conclusion that the sale of its own chips, combined with the licensing of patents, provides the optimal financial position for investing in basic research of new technologies and thus allows them to outpace competitors. In addition, the presence of its own semiconductor business allows the company to distribute patented technologies faster and more widely.
In December, Qualcomm will end the next fiscal quarter. It is already clear that revenues from the delivery of Qualcomm 3G and 4G devices were higher than previously predicted. It is expected that profits will also exceed forecasts. And after the news about the refusal to split Qualcomm shares rose in price by 4% to $ 48.77.
Qualcomm employs two large divisions - one selling microchips for mobile devices, the other sells licenses for technologies patented by the company. The second direction Qualcomm provides the bulk of the profits. However, in the revenue structure, more than half comes from chip sales.
In recent years, Qualcomm's semiconductor business has grown steadily: the company was ahead of its competitors in the adoption of fourth-generation communication technology, LTE. In late September, the company had $ 31 billion in accounts.
')
So far, Qualcomm has a much better financial position than most other chip suppliers: Qualcomm gets most of its profits thanks to licensing fees for using its patents. But it is precisely this side of the company's business that attracts increased attention of antimonopoly authorities in various countries, including the United States and China. The fact is that many cell phone manufacturers complained to regulators about the dominance of Qualcomm in the market and the very large size of the license fees it charges.
On December 8, the European Commission filed charges of violating antitrust laws. The European Commission believes that Qualcomm has paid its main client for using only its chips. In addition, according to the regulator, Qualcomm tried to force competing company Icera out of the market, selling its products at a price below cost.
Qualcomm faces a fine for each case of violation of the law in the amount of up to 10% of its annual revenue (in 2015 fiscal year, Qualcomm revenues amounted to about $ 25 billion). In addition, regulators may require Qualcomm to change the way they do business.
On November 18, Qualcomm received a report from the Korea Fair Trade Commission (KFTC) and accusations of violating South Korean antitrust laws. In particular, the report states that the practice of licensing Qualcomm patents violates the laws of the country, since the company's patents concern only the hardware component and force partners to license other intellectual property illegally.
Qualcomm does not admit his guilt.
However, last year, the antitrust investigation of Qualcomm's activities in China ended up for the giant in paying a huge fine of almost $ 1 billion.
Some Qualcomm customers, including Samsung Electronics , the largest manufacturer of mobile phones, no longer want to be addicted to Qualcomm chips. Therefore, they began to independently develop similar products.
Against the background of the current situation, the Qualcomm quotes for the year decreased by 37%. In the first half of Qualcomm profits fell sharply. The company has developed a cost reduction plan of $ 1.4 billion.
Investors led by the fund Jana Partners offered Qualcomm to consider the possibility of dividing into two independent companies. The Board of Directors formed a special commission on this issue, which analyzed all possible separation options, including the creation of two fully independent companies and an IPO of a subsidiary with the issue of “tracking” shares. But, as stated, the analysis showed the feasibility of maintaining the current structure, according to Vedomosti.
The Board of Directors came to the conclusion that the sale of its own chips, combined with the licensing of patents, provides the optimal financial position for investing in basic research of new technologies and thus allows them to outpace competitors. In addition, the presence of its own semiconductor business allows the company to distribute patented technologies faster and more widely.
In December, Qualcomm will end the next fiscal quarter. It is already clear that revenues from the delivery of Qualcomm 3G and 4G devices were higher than previously predicted. It is expected that profits will also exceed forecasts. And after the news about the refusal to split Qualcomm shares rose in price by 4% to $ 48.77.
Source: https://habr.com/ru/post/297358/
All Articles