As Problems Deepen, Qualcomm Brings In New Blood

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Qualcomm has promoted one of its own to chief operating officer and brought in a former Sprint executive to be group president. The move is odd because Sprint has adopted WiMax for its next generation phones, a move that is seen as a threat to  Qualcomm’s dominance in the wireless chip world. Perhaps the Sprint executive can share some of his experiences in the company’s choice to move to WiMax.

Qualcomm is in a mess, but the company will not admit it. The International Trade Commission has just announced that it is siding with Broadcom in a patent dispute with Qualcomm. Broadcom is asking for an import ban on phones that use the technology. Probably bad for Qualcomm if that happens.

Qualcomm is still in a legal battle with its largest customer, Nokia. And, Texas Instruments has complained that the fees that Qualcomm charges for its techology are "higher than the agreed-upon standard of "fair, reasonable and nondiscriminatory," according to Reuters.

TI’s recent downward guidance for 2007 would also seem unfavorable to Qualcomm, given the number of chips that Texas Instuments sells into the mobile phone market. As TradingMarkets points out: "The cell phone industry is no longer going gangbusters. Subscriber growth is slowing in mature markets like Japan, Korea, and Western Europe, according to the investment research firm Morningstar. People who want handsets in such markets are looking for replacements instead of new phones." Industry forecasts are for cell phone sales growth to drop to under 10% in 2007 after a spurt of over 20% in 2006.

Qualcomm’s stock is down to just above $38. It has traded as high as $53 over the last year. If the company does not clean up some of it myriad problems, that stock could certain drop below its annual trough of $33.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.