Qualcomm names COO Mollenkopf CEO, ending Microsoft talk
REUTERS - Qualcomm Inc(QCOM.O) promoted Chief Operating Officer Steve Mollenkopf to chief executive in a surprise move that follows investor pressure on the phone chipmaker to return capital and speculation that he might be poached to run Microsoft(MSFT.O).
The replacement of current CEO Paul Jacobs, the 51-year-old son of a Qualcomm co-founder, comes a day after Bloomberg News reported that Microsoft has been considering Mollenkopf as a candidate to replace retiring CEO Steve Ballmer.
"Obviously Paul is still a very young man, so (this is) not something that many of us were expecting but something that has likely been in the works for some time," said Williams Financial Group analyst Cody Acree.
"I think the consideration of Microsoft of Mollenkopf may have prompted a bit of a speedier announcement."
Mollenkopf, 41, will take the reins at the world's biggest maker of cellphone chips in March, as Qualcomm faces an antitrust investigation in China, its largest market.
At least one investment fund has been pushing for a return of capital to shareholders, among other options. The company had a cash pile of $29.4 billion as of September 29.
Qualcomm shares were up 0.7 percent at $73.21 in late-morning trading on the Nasdaq, suggesting investors saw little impact from the unexpected change of CEO.
"We believe that Mollenkopf had effectively been running the day-to-day operations of the company, so we don't expect daily operations to change materially," JPMorgan analyst Rod Hall said in an email.
Mollenkopf led Qualcomm's $3.1 billion acquisition of radio frequency chipmaker Atheros Communications Inc in 2011, its biggest acquisition.
An engineer, he will replace Jacobs on March 4, after the annual shareholder meeting.
Jacobs has been CEO since 2005, taking over from his father Irwin who co-founded Qualcomm in 1985.
Under the son's leadership the company's share price has more than doubled and earnings have tripled. The Philadelphia SE Semiconductor Index has risen just over 20 percent in the same period.
While most of Qualcomm's revenue comes from chips that allow phones to communicate with carrier networks, most of its profit comes from licensing patents for its CDMA cellphone technology -- a component in new fourth-generation mobile phones.
Mollenkopf focuses mostly on the semiconductor side of the business, said Argus Research analyst Jim Kelleher.
"If anything, Mollenkopf in the lead means (an) intense commitment to the semi business," he said.
Morningstar analyst Brian Colello said the appointment brought important continuity to Qualcomm's chip leadership team at a time when its dominance in almost all high-end phones faces challenges from the likes of Intel Corp (INTC.O).
The antitrust investigation in China will be a key concern for the new CEO. China's top economic planning agency has substantial evidence against Qualcomm, state media quoted a senior official as saying on Thursday.
Half of Qualcomm's revenue comes from China, including Foxconn Technology Group, the assembler of most of the world's top-selling electronic gadgets including Apple Inc's (AAPL.O) iPhone.
Most of the chips the company sells in China are used in devices that are exported. But domestic Chinese sales make up around a fifth of Qualcomm revenue and it is positioned to reap the vast majority of licensing fees for phone chips in the world's biggest smartphone market.
Qualcomm denies any wrongdoing and says it is cooperating with the probe, which analysts say is likely tied to royalty negotiations ahead of the impending $16 billion rollout of commercial fourth-generation services by China's big telecoms carriers.
(Additional reporting by Nadia Damouni; Writing by Rodney Joyce; Editing by Kirti Pandey and Ted Kerr)
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