Qualcomm’s Paul Jacobs Offers Farewell at Shareholders Meeting

Former Qualcomm executive chairman and CEO Paul Jacobs ended his 28-year career with the telecommunications giant Friday with a heartfelt farewell at the company’s annual shareholders’ meeting.

In a short speech to several hundred shareholders at Qualcomm (NASDAQ: QCOM) headquarters in San Diego, Jacobs acknowledged the role his father Irwin Jacobs played as Qualcomm’s founding CEO and expressed his gratitude to the employees who created the technologies that led to the wireless Internet, and “changed everything.”

To his father, who was among seven founders “who shared the belief that digital communications would change the world,” Paul Jacobs said, “I hope I lived up to your expectations.”

In 2005, when he was named to succeed his father as Qualcomm CEO, Paul Jacobs said, “My guiding vision was that the wireless Internet would have a broader impact than the Internet alone.”

There were Shakespearean overtones to Jacobs’s soliloquy, as well as his departure from the stage at Qualcomm,  the world’s biggest supplier of smartphone chips and other components.

As executive chairman, Jacobs was Qualcomm’s embattled king—beset by mounting conflicts over the company’s technology licensing business and confrontations with unhappy shareholders. In his talk, Jacobs referred to “times of intense pressure, when the company “turned our challenges into opportunities and our adversaries into friends and partners. Thank you to everyone who made this possible.”

Yet the company escaped a hostile takeover by rival Broadcom (NASDAQ: AVGO) only after President Donald Trump issued an executive order that prohibited the $117 billion buyout from proceeding any further.

Before Qualcomm’s originally scheduled March 6 shareholder meeting, Broadcom appeared poised to win a majority of Qualcomm’s board seats, according to a March 5 Bloomberg report. Qualcomm CEO Steve Mollenkopf was reported to be the second-lowest vote-getter at that time. Jacobs, who was later reported to be at the bottom of the field, was replaced as board chairman on March 9—and lost his seat on the board altogether a week later.

In the end, Qualcomm’s board apparently decided that Paul Jacobs had gone too far after he continued to press ahead in his quest to take the company private in a leveraged buyout. After those efforts were publicly disclosed, Qualcomm’s board announced March 16 that Jacobs would not be re-nominated for the board at Friday’s annual shareholders’ meeting.

His reign as a Qualcomm board member—and his affiliation with the company—ended Friday with the shareholder vote.

Compared with the high drama of recent months, the shareholders’ meeting itself was routine—even perfunctory. President Trump’s executive order had disqualified the slate of six candidates that Broadcom had nominated for Qualcomm’s board. Officials reported that a majority of shareholders had voted to re-elect the 10 incumbent directors to the board, and passed six other proposals that Qualcomm’s board had recommended for shareholder approval. Only one measure was voted down—a measure that Broadcom had proposed that was related to the removal of existing directors.

Jeff Henderson, who replaced Jacobs as Qualcomm board chairman, told shareholders Friday that results of the board vote were preliminary, and a regulatory notice would take four business days to be filed. Reuters reported Friday, however, that shareholder support for the incumbent board was tepid at best.

Even with Broadcom’s takeover bid in the rear-view mirror, Qualcomm must still somehow overcome the issues that have been dragging down its business—especially the costly legal battles over its technology licensing fees that have depressed its share price and made Qualcomm itself a takeover target.

Throughout the months-long takeover battle, Qualcomm’s board and executives argued that Broadcom was making a low-ball bid, and Qualcomm just needed time to boost its earnings to reflect its true value.

CEO Mollenkopf maintained that line in a presentation to shareholders Friday, saying he remains confident that Qualcomm can achieve earnings per share of $5.25 in fiscal 2019 by completing Qualcomm’s acquisition of the Dutch semiconductor maker NXP and a planned $1 billion cost-reduction program. If Qualcomm can resolve its multi-billion dollar dispute with Apple (NASDAQ: AAPL), Mollenkopf projected that Qualcomm’s earnings in fiscal 2019 would climb even higher, to somewhere between $6.75 to $7.50 a share.

Aside from voicing his confidence, though, Mollenkopf provided few insights about how, exactly, he plans to turn the company around.

Jacobs, for his part, said he remains friends with Qualcomm’s board members. “They know they are shepherds of a national treasure,” he said.

As for Qualcomm’s path forward in the smoldering aftermath of its battle against Broadcom, Paul Jacobs described the next generation of 5G technology and all that lies beyond as “Shakespeare’s undiscovered country.” Qualcomm’s “True north,” he added, is “to keep innovating.”

Jacobs said he often thought of two sayings during his reign as Qualcomm CEO and executive chairman, and they both seemed apropos of the occasion Friday: “Every new beginning comes from some other beginning’s end;” and “The best way to predict the future is to invent it.”

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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