Mollenkopf had been in line to eventually succeed CEO Paul Jacobs,
the 51-year-old son of a Qualcomm co-founder, but that plan was sped
up in order to keep the senior executive from leaving, Jacobs told
Reuters in an interview.
"Our executives are very talented and very sought after," Jacobs
said, when asked by Reuters whether the promotion was related to an
offer from Microsoft.
"The timing is a little faster than we originally planned but the
key thing is to make sure we kept management continuity," Jacobs
Jacobs and Mollenkopf declined to specifically discuss Microsoft or
whether Mollenkopf had a job offer from the world's largest software
company, which is seeking a candidate to replace retiring CEO Steve
On Thursday, Bloomberg News reported that Microsoft has been
considering Mollenkopf as a candidate for CEO.
"He would have been an awesome (Microsoft) CEO," said FBR analyst
Chris Rolland. "But Qualcomm didn't want to lose him, and it makes
sense to me."
"If I were the son of a founder of a $130 billion company, I would
want to make sure I have the top guy behind me — and Steve is
definitely that guy," Rolland said.
Removing Mollenkopf from the shortlist of CEO candidates at
Microsoft could complicate matters for its board. The company was
down to a "handful" of candidates with no clear leader, sources
familiar with the matter told Reuters this week.
Mollenkopf, 44, will take the reins in March, as Qualcomm faces a
shift in smartphone growth away from the United States toward China,
where it faces an antitrust investigation and where consumers often
spend less on their phones.
Qualcomm shares were flat at $72.73 on Nasdaq, suggesting investors
saw little impact from the change.
Jacobs, who replaced his father Irwin as Qualcomm CEO in 2005, will
serve as executive chairman and focus on developing new technology
and long-term opportunities, the company said.
"Paul is a visionary guy and Mollenkopf really knows how to run
things. So I think this division of labor makes a ton of sense,
although it's a little earlier than I would have expected," said
Bernstein analyst Stacy Rasgon.
Under Jacobs, Qualcomm, founded in 1985, has become the top chip
supplier for smartphones and its stock value has surpassed that of
Intel Corp. Intel is still the world's largest chipmaker by revenue
but is struggling to gain a foothold in mobile.
Investors have been urging Qualcomm to give back more of its
profits, and last month Jacobs promised to return three-quarters of
its free cash flow to shareholders.
[to top of second column]
Mollenkopf, an engineer, led Qualcomm's $3.1 billion acquisition of
radio frequency chipmaker Atheros Communications Inc in 2011, its
biggest acquisition. He will replace Jacobs on March 4, after the
annual shareholder meeting.
Under Jacobs' leadership, the company's share price has more than
doubled, giving Qualcomm a market capitalization of over $120
billion, while earnings have tripled. The Philadelphia SE
Semiconductor Index has risen just over 20 percent in the same
While most of Qualcomm's revenue comes from chips that allow phones
to communicate with carrier networks, most of its profit comes from
licensing patents for its CDMA cellphone technology — a component in
new fourth-generation mobile phones.
Mollenkopf focuses mostly on the semiconductor side of Qualcomm's
"If anything, Mollenkopf in the lead means (an) intense commitment
to the semi business," said Argus Research analyst Jim Kelleher.
The antitrust investigation in China will be a key concern for the
new CEO. China's top economic planning agency has substantial
evidence against Qualcomm, state media quoted a senior official as
saying on Thursday.
Half of Qualcomm's revenue comes from China, including Foxconn
Technology Group, which assembles most of the world's top-selling
electronic gadgets including Apple Inc's iPhone.
Most of the chips the company sells in China are used in devices
that are exported. But domestic Chinese sales make up around a fifth
of Qualcomm revenue and it is positioned to reap the vast majority
of licensing fees for phone chips in the world's biggest smartphone
Qualcomm denies any wrongdoing and says it is cooperating with the
probe, which analysts say is likely tied to royalty negotiations
ahead of the impending $16 billion rollout of commercial
fourth-generation services by China's big telecoms carriers.
(Additional reporting by Nadia Damouni
and Sinead Carew in New York; Writing by Rodney Joyce; Editing by
Kirti Pandey, Ted Kerr and Richard Chang)
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