Steven Mollenkopf, the Chief Executive Officer of Qualcomm Inc, finds his attempts to diversify, thwarted. The 49-year old engineer faces immense investor pressure, over low revenue and no diversification.
Qualcomm shareholders are frustrated at the change of events. The CEO has not been able to diversify his business. With high competition in the mobile phone sector, Qualcomm needs to expand to show good profits.
In the mobile phone sector, Qualcomm already faces various issues. The dispute with Huawei Technologies Co Ltd. and Apple Inc has been laying pressure on the company.
To get the acquisition deal with NXP, Mollenkopf had sought help from the US government to block the deal by its rival Broadcom Ltd, to get it himself and he was successful too.
But later the deal backfired when the Chinese government stalled the deal with NXP Semiconductors (NXPI.O).
With the NXP Semiconductor deal off, Qualcomm has only the mobile phone sector in its hand. Shareholders are now placing pressure on Mollenkopf to diversify within one or two years. Tom Plumb from Wisconsin Capital Management, who has 2 percent of his portfolio with Qualcomm allocation, says that Mollenkopf can prove it within two years of his tenure.
By breaking the NXP deal, Qualcomm had to pay a breakup fee of $2 billion, another dip in its revenue. But Mollenkopf believes that such acquisitions will still be possible between China and the United States after trade tensions come down between the two countries.
Mollenkopf also feels that the revenue from sectors other than mobile phones will increase this year. He expects an increase to 22 percent from last year’s 13.4 percent from other sectors. His immediate goal is to improve the adjusted earnings per share to $7.50 per share compared to $4.28 per share in 2017.