Nobody knows what goes on behind closed doors. The latest development in Qualcomm’s (QCOM) C-suite has investors in head-scratching mode.
On Tuesday, the chip giant announced the retirement of CEO Steve Mollenkopf. Mollenkopf, who has been at the helm for the past 7 years, will be succeeded by current President Cristiano Amon, who will take over the reins in June.
While the press release said Mollenkopf’s decision to walk away was a personal choice, Charter analyst Edward Snyder thinks there is more to it.
“As the 52-year-old CEO of a $170B company, the timing is perplexing,” the 5-star analyst said. “We believe possible causes for the management shift include a potential acquisition, a company policy violation, health issues, or tough sledding in modems and RF in 2021.”
Another possibility for the departure, says Snyder, could be down to Qualcomm’s desire to turn a new page after five tumultuous years.
It has been an action-packed period and included the “failed acquisition of NXP, Broadcom’s hostile takeover bid, difficult litigation with Apple and Huawei, and the FTC case which had the potential to derail Qualcomm’s entire business model had it not been reversed by the Court of Appeals for the Ninth Circuit.”
But what about the possibility Mollenkopf simply wanted a change of scenery? If so, says Snyder, then there shouldn’t be much upheaval. Amon knows the ins and outs of the business and has “contributed significantly to executing the company’s current strategy.”
However, in contrast to the 5G opportunity cited by the majority of Street analysts as a significant upcoming tailwind for Qualcomm, Snyder expects the company to face strong competition from MediaTek, HiSilicon and Samsung “in basebands and looming problems in RF.”
“Our bearish outlook on Qualcomm’s baseband and licensing businesses is unchanged barring any significant surprises on its February 3rd earnings call,” the analyst summed up forlornly.
Overall, Snyder sticks to a Market Perform (i.e. Hold) rating without suggesting a price target. (To watch Snyder’s track record, click here)
Turning now to the rest of the Street, where 7 other analysts have Hold ratings for QCOM, but are outgunned by 17 Buys. The resultant Moderate Buy consensus rating is backed by a $165 average price target. Should the figure be met, investors are looking at modest 6% gains. (See Qualcomm stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
