In a unanimous decision, Qualcomm has decided to reject the massive $130 billion deal from Broadcom, who happens to be one of Apple’s biggest chip suppliers in the market. If the deal would have gone through, Qualcomm’s shares would start getting traded at $70, which is higher than the company’s current value, so why did the rejection take place?
Well, according to Qualcomm’s official website, Paul Jacobs, the Executive Chairman and Chairman of the Board of the company claims that the decision was taken because the $130 billion amount was going to undervalue the company.
We don’t understand how a company’s ‘$70 share value after the deal’ would make it undervalued. However, if you take a look at the long-term perspective, the company’s executives might have done the right thing. Currently, Qualcomm’s LTE modems are able to obtain downloading speeds of 1.2Gbps, meaning that a transition to 5G modems is more than likely.
Steve Mollenkopf, CEO of Qualcomm says that the company will continue to provide value to its shareholders but as a separate-functioning company.
“No company is better positioned in mobile, IoT, automotive, edge computing and networking within the semiconductor industry. We are confident in our ability to create significant additional value for our stockholders as we continue our growth in these attractive segments and lead the transition to 5G.”
Qualcomm is currently the largest chipset manufacturer for smartphones and tablets and its fortunes have not seen a pretty end thanks to the legal squabble it has got into with Apple.
The company will be mass producing its Snapdragon 845 very soon, leading several phone makers to continue being its partner for the long term.
Perhaps another tech giant might make an offer that Qualcomm is unable to refuse.
