Tuesday, March 13, 2007

Qualcomm 2007 Annual Meeting

[Outside sh meeting]
I left my house before 6:30 Tuesday to catch the commuter flight to San Diego, Copley Symphony Hall, and the 2007 Qualcomm shareholders’ meeting. (Stockholder meeting in Qualcomm parlance). This was my first Qualcomm annual meeting since 2001 and 2002 — when I was researching my Qualcomm teaching cases — and my first since Paul Jacobs became CEO in 2005.

The news coverage is pretty cursory, with only one reporter filing an in-person report, and everyone else keying off the press release. Of course, the big news for most is that Qualcomm raised their quarterly guidance and their dividend (from 12¢ to 14¢/quarter).

As I saw it, the major news from Jacobs (slides are online here) was:
  1. the aforementioned financial results;
  2. the big news for 2007 is MediaFLO USA deployment with Verizon (as of March 1) and the planned Cingular launch later this year. Jacobs was very candid about not knowing how quickly the service will be adopted until they have some real customer decisions;
  3. a strategy to no longer concede developing markets to competitors, as evidenced by the LG “3G for All” design win using Qualcomm chips, and its Wireless Reach PR campaign.
But the elephant in the room is the looming game of chicken over Nokia’s announced intention not to renew its CDMA license with Qualcomm, which expires after April 9. Barring some last-minute agreement, Nokia plans to ship cell phones without paying royalties and (as lead in-house attorney Steven Altman acknowledged) the two parties are likely to start suing. Right now, Qualcom is quoting Q4 revenue forecasts (July-Sept) assuming Nokia will settle, but at some point will take them out of forecasts. (I hope to say more on this later).

[Welcome screen]Finally, some personal impressions. It was only Paul Jacobs’ 2nd meeting as CEO, and the 3rd time in the past two years that I’d seen him make a speech in San Diego. For me, it still seemed odd to see founder Irwin Jacobs — the company’s public face for 20 years — relegated to a corner of the Qualcomm section, virtually unnoticed except for 11 minutes chairing the formal part of the meeting. But the symbolic message was clear — Paul’s management team is now in charge — reinforced by the retirement of four directors from the Irwin Jacobs era, including one of his co-founders (Dee Coffman), his onetime heir apparent (Rich Sulpizio), and “a personal friend of many years,” former University of California president (and longtime UCSD chancellor) Richard Atkinson.

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