Qualcomm (QCOM) Finally Wises Up

Qualcomm’s (QCOM) management has not done its investors any favors by fighting wars with its largest customer, Nokia (NOK), and its largest rival, Broadcom (BRCM). The battles, over royalties and intellectual property have put a cloud over the firm’s prospects for three years. It has cost Qualcomm revenue and countless millions of dollars in legal fees. And, it has left management to deal with issues which have nothing to do with running the company day-to-day.

Qualcomm has finally come to its senses. It settled its differences with Nokia many months ago, and now it is burying the hatchet with Broadcom at the very high cost of $891 million. That seems like a lot of money, but it may be cheap in terms of securing the company’s future.

According to Reuters, “The settlement will result in the dismissal of all litigation between the companies, including patent infringement claims Broadcom brought against Qualcomm.”

Why didn’t Qualcomm make the decision earlier and take away a critical strategic threat to its business? The fault for that sits with the Jacobs family, father and son, who have run the company since it was started. Their stubbornness and misplaced optimism about the outcome of the suits between it and Broadcom has been one of the biggest mistakes by a large US tech company management during this decade.

Jacobs the younger still have his job and has finally reversed the most damaging decision he ever made.

Douglas A. McIntyre