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View Poll Results: Will Broadcom Acquire Qualcomm?

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Thread: Broadcom buying Qualcomm just won't happen? (Poll)

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    Admin Daniel Nenni's Avatar
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    Broadcom buying Qualcomm just won't happen? (Poll)

    Speaking of fake news........ according to Fudzilla, after talking to "a few dozen" C level executives, the Broadcom acquisition of Broadcom won't happen. A handful of outside analysts also feel it would be bad for the industry.

    Broadcom buying Qualcomm just won’t happen

    I strongly disagree and will argue the pro side but I would be interested in the SemiWiki crowd's thought on this.. Will it happen? Why or why not?

    Broadcom buying Qualcomm just won't happen? (Poll)-broadcom-qualcomm.jpg

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    It won't happen at the current price offered. Hostile bids, where you have the management of the target company actively fighting the deal, very often fail. And the premium here is so low that there isn't much incentive for shareholders to support it either. If Broadcom sweetens the deal and gets Qualcomm management on board, then it's got a reasonable chance of success, but even then then there are regulatory hurdles. I think $80 would be the absolute minimum if the deal was friendly, and it's not, so it could take $90 or even $100 to get a hostile bid approved by shareholders.

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    Quote Originally Posted by count View Post
    It won't happen at the current price offered. Hostile bids, where you have the management of the target company actively fighting the deal, very often fail. And the premium here is so low that there isn't much incentive for shareholders to support it either. If Broadcom sweetens the deal and gets Qualcomm management on board, then it's got a reasonable chance of success, but even then then there are regulatory hurdles. I think $80 would be the absolute minimum if the deal was friendly, and it's not, so it could take $90 or even $100 to get a hostile bid approved by shareholders.

    Agreed. I think $100 would do it and I can assure you Hock Tan can raise it. Good for QCOM investors but you think it will be good for the industry?


    And what are the odds of Hock Tan keeping the name Qualcomm and ditching Broadcom?

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    Quote Originally Posted by Daniel Nenni View Post

    Agreed. I think $100 would do it and I can assure you Hock Tan can raise it. Good for QCOM investors but you think it will be good for the industry?


    And what are the odds of Hock Tan keeping the name Qualcomm and ditching Broadcom?
    I think BCOM takeover of QCOM will basically kill off innovation at QCOM and the mobile industry will lose an innovation powerhouse. Its a horrible thing for the mobile industry if the takeover is approved and it manages to clear regulatory hurdles. BCOM will almost surely kill ARM server projects which have good potential. QCOM's licensing business could also be severely affected. The BCOM management will focus on just financial engineering. Earnings , P/E and other number stuff. They do not care about real engineering and innovation. They will layoff massive number of employees at QCOM. QCOM shareholders would be stupid to approve this takeover bid.

    Qualcomm could lose 30% of workforce

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    Quote Originally Posted by Daniel Nenni View Post

    Agreed. I think $100 would do it and I can assure you Hock Tan can raise it. Good for QCOM investors but you think it will be good for the industry?


    And what are the odds of Hock Tan keeping the name Qualcomm and ditching Broadcom?
    I think Hock will go with the Qualcomm name. Qualcomm has a much stronger brand, and keeping the name is would be a small overture to current Qualcomm employees and management, a way to keep the legacy of all they have done alive in some way. Hock himself could not care less about the Broadcomm name, he cares only for profits.

    Quote Originally Posted by raghu78 View Post
    I think BCOM takeover of QCOM will basically kill off innovation at QCOM and the mobile industry will lose an innovation powerhouse. Its a horrible thing for the mobile industry if the takeover is approved and it manages to clear regulatory hurdles. BCOM will almost surely kill ARM server projects which have good potential. QCOM's licensing business could also be severely affected. The BCOM management will focus on just financial engineering. Earnings , P/E and other number stuff. They do not care about real engineering and innovation. They will layoff massive number of employees at QCOM. QCOM shareholders would be stupid to approve this takeover bid.

    Qualcomm could lose 30% of workforce
    Agree with the above. I've been saying for years that Broadcom is the Valeant of semiconductors - although with slightly better ethics. It should be noted that Valeants downfall came after it's failed hostile bid for Allergan, as the contentious battle with Allergens management is partly what churned up some of the ethical issues at Valeant. I'm wondering, if Broadcom's bid for Qualcomm fails... if history will rhyme.

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    Quote Originally Posted by raghu78 View Post
    I think BCOM takeover of QCOM will basically kill off innovation at QCOM and the mobile industry will lose an innovation powerhouse. Its a horrible thing for the mobile industry if the takeover is approved and it manages to clear regulatory hurdles. BCOM will almost surely kill ARM server projects which have good potential. QCOM's licensing business could also be severely affected. The BCOM management will focus on just financial engineering. Earnings , P/E and other number stuff. They do not care about real engineering and innovation. They will layoff massive number of employees at QCOM. QCOM shareholders would be stupid to approve this takeover bid.

    Qualcomm could lose 30% of workforce
    I think Avago cut about 2,000 people when they acquired Broadcom, which in my opinion was a good thing. Broadcom had some fat and now I see many new companies with former Broadcom people behind them. Avago did kill some groups but they sold others. The Broadcom IoT group for example went to Cypress which is a much better place for it. I don't recall who bought the server group but I would expect it found a better home. All-in-all I feel the Broadcom acquisition and resulting industry disruption, was for the greater good of semiconductors, absolutely.

    In my opinion QCOM has even more fat and even more new innovative companies will result and again it will be for the greater good, my opinion.

    Bottom line: QCOM shareholders would be stupid to turn down $100 for a $60 stock.....

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    Qualcomm is ripe for disruption. Some sort of transaction could be the catalyst.

    While money is the motivator for shareholders, there is some question of what the business model would be. Would Qualcomm shift into operating a cash cow for the milk, which would require little R&D resources? Or is there some other plan to unlock value?

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    Quote Originally Posted by raghu78 View Post
    I think BCOM takeover of QCOM will basically kill off innovation at QCOM and the mobile industry will lose an innovation powerhouse. Its a horrible thing for the mobile industry if the takeover is approved and it manages to clear regulatory hurdles. BCOM will almost surely kill ARM server projects which have good potential. QCOM's licensing business could also be severely affected. The BCOM management will focus on just financial engineering. Earnings , P/E and other number stuff. They do not care about real engineering and innovation. They will layoff massive number of employees at QCOM. QCOM shareholders would be stupid to approve this takeover bid.

    Qualcomm could lose 30% of workforce
    I agree with this too!
    Broadcom acquisition of Qualcomm should not happen, and will not happen.
    Would this acquisition happen, who would get benefit?
    - Apple as Broadcom is expected to halt the Qualcomm suit, even if QCOM should win against Apple
    - Intel would be very happy too, if/when Broadcom would stop ARM based servers product line
    - and Broadcom, as they could quickly extract a lot of money from QCOM, detrimental to innovation and the workforce!

    Qualcomm is one of the very few real innovators of the semiconductor market, it would be a pity to see this innovation beeing killed...

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    Broadcom just raised it's bid to $82, which might be a high enough price to get the deal done IF management and the board can be won over. AVGO made no indication that they would go hostile, and Hock is not someone to overpay so this very well could be his best offer. There are still regulatory concerns, although Hock has been creative in the past about working around those - In this case spinning off QTL would probably help assuage regulators.

    I'm 50/50 if this gets done or not. There were, in my mind, 3 pieces to getting this deal done - price, management support, regulatory approval. I think the price is now right, but it remains to be seen if management will support the bid, and if regulators will approve it. Management has a tough decision here and I don't envy them. If they don't support the bid, there will be an activist backlash.

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    Quote Originally Posted by count View Post
    Broadcom just raised it's bid to $82, which might be a high enough price to get the deal done IF management and the board can be won over. AVGO made no indication that they would go hostile, and Hock is not someone to overpay so this very well could be his best offer. There are still regulatory concerns, although Hock has been creative in the past about working around those - In this case spinning off QTL would probably help assuage regulators.

    I'm 50/50 if this gets done or not. There were, in my mind, 3 pieces to getting this deal done - price, management support, regulatory approval. I think the price is now right, but it remains to be seen if management will support the bid, and if regulators will approve it. Management has a tough decision here and I don't envy them. If they don't support the bid, there will be an activist backlash.
    I don't think QCOM management can be won over because they will lose their jobs, all of them, and it will not be the best ending to their career legacy. Apple really did sink QCOM here. This is one for the history books, absolutely.

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    Daniel, I now think you were right the whole time, the buyout will happen.
    After Imagination Technologies and Qualcomm (not that they were ever on the same league), who will dare fight Apple now? This may not be good for the mobile ecosystem, shows Apple too strong and creates uncertainty around Qualcomm which is itself very important to the Android ecosystem.

    Imagine if next step Broadcom sells parts of QCOM to Apple?

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    Quote Originally Posted by mbello View Post
    Daniel, I now think you were right the whole time, the buyout will happen.
    After Imagination Technologies and Qualcomm (not that they were ever on the same league), who will dare fight Apple now? This may not be good for the mobile ecosystem, shows Apple too strong and creates uncertainty around Qualcomm which is itself very important to the Android ecosystem.

    Imagine if next step Broadcom sells parts of QCOM to Apple?
    Qualcomm is spilled milk. So is MediaTek and the rest of the smartphone SoC centric fabless companies.

    I had an interesting discussion today with a qualcomm customer who competes with Apple. Since they do not make their own chips it takes a lot longer to get a system out and they are limited in what they can do. On the other hand Apple uses simulators, emulators, and FPGA prototyping to start the software development process even before the chip tapes out and way before first silicon gets back. And the chip is customized to the software which is why Apple gets a new phone out every year. How is a systems company who buys chips and uses Android going to compete with that? Apple also gets a customized process from TSMC that no one else gets and has most favored nation status with the supply chain in regards to pricing and capacity...

    The only answer is for systems companies to do their own chips and that is what is happening in all markets. Smartphones is already a done deal. Apple, Samsung, Huawei, Google, etc... the 800lb Gorillas own this market. Automotive is next and the rest of the systems companies in all other markets had better be on the silicon trail if they want to stay in business. You can bet Hock Tan saw this coming which is why he is playing fabless clean-up and will continue to do so.

    The only way I see to stop Apple is to disrupt them like they disrupted hundreds of companies with the iPod, iPad, and iPhone. Otherwise the other guys will have to be satisfied with the NOT APPLE market which, in regards to margins, is getting smaller by the day, absolutely.

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    What you say is true, Dan. Apple is making and will generate most of the profits from the mobile. Nevertheless, marketing principles teach us that it's possible to create successful business case in every segment. Clearly, it's too late to compete on the same segment than Apple.
    An interesting example: in France, the top 3 smartphone supplier (by revenues) is:
    #1 Samsung
    #2 Wiko
    #3 Apple

    You don't know Wiko? That's normal, they only play in French market, selling good quality smartphones (euros 100 to 250), not the same features/positionning than S. and A., but OK. (Apps Proc. is coming from China, S/W developed in France). That's one option.

    But, for large chip company searching for high growth market segments, automotive is certainly attractive, data center could be an option, but then you compete with Intel.
    IoT? Industrial IoT will grow, but at a differente rate than mobile or consumer.

    Consumer oriented IoT? Do we really think that wearables or smart home will become huge segments? As far as I am concerned, I don't! Nice for the buzz, not for the revenues...

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    QCOM just upped it's offer for NXPI, no doubt related to the company fighting off AVGO. I think this move could backfire on Qualcomm - if the company fails to smoothly integrate NXPI (no easy task), heads will start rolling and a patient Broadcomm could come in as a white knight. If I was Hock Tan, I'd be stirring up activists and waiting for the right moment to go hostile.

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    Quote Originally Posted by count View Post
    QCOM just upped it's offer for NXPI, no doubt related to the company fighting off AVGO. I think this move could backfire on Qualcomm - if the company fails to smoothly integrate NXPI (no easy task), heads will start rolling and a patient Broadcomm could come in as a white knight. If I was Hock Tan, I'd be stirring up activists and waiting for the right moment to go hostile.
    I honestly think the deck is stacked against QCOM. Hock is going to get them sooner or later. I really think QCOM acquiring NXP is a case of going to where the puck is versus where it will be.

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    It sounds like there has been some progress on the regulatory side of things, so it seems the only real stopping block is QCOM management. It looks like the market is pricing in roughly 50/50 odds of this happening, and I'm starting to think it's more like 80/20. QCOM management is going to have a rough time no matter how this goes, since if they reject the bid and shares fall to the mid $50s they are going to be dealing with some very pissed off investors and activists will surely move in. So this has really become a face saving exercise for QCOM management, where they need to negotiate a slightly higher bid in order to justify their golden parachutes. They are asking for $90, which I don't think Hock will want to pay, but I could see the bid getting raised slightly (maybe $85) if QCOM agrees to drop the NXPI deal.

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    Quote Originally Posted by count View Post
    It sounds like there has been some progress on the regulatory side of things, so it seems the only real stopping block is QCOM management. It looks like the market is pricing in roughly 50/50 odds of this happening, and I'm starting to think it's more like 80/20. QCOM management is going to have a rough time no matter how this goes, since if they reject the bid and shares fall to the mid $50s they are going to be dealing with some very pissed off investors and activists will surely move in. So this has really become a face saving exercise for QCOM management, where they need to negotiate a slightly higher bid in order to justify their golden parachutes. They are asking for $90, which I don't think Hock will want to pay, but I could see the bid getting raised slightly (maybe $85) if QCOM agrees to drop the NXPI deal.
    Agreed. I'm really looking forward to the QCOM board meeting. I'm hoping Carl Icahn pops in for a visit if things don't move ahead.

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    The saga continues:

    Broadcom Is on Course to Win Majority of Qualcomm Board Seats - Bloomberg

    This show of bad faith is an unbecoming look for Qualcomm management. Broadcom will be US domiciled in a few short quarters, so this is just a delay tactic.

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