* Jacobs says succession previously planned, but sped up
* Execs decline to comment on Microsoft
By Noel Randewich and Sruthi Ramakrishnan
SAN FRANCISCO, Dec 13 Qualcomm Inc, the
world's biggest maker of cellphone chips, unexpectedly named
Chief Operating Officer Steve Mollenkopf as chief executive on
Friday, heading off the possibility he might be poached to run
Mollenkopf had been in line to eventually succeed CEO Paul
Jacobs, the 51-year-old son of a Qualcomm co-founder, but that
plan was sped up in order to keep the senior executive from
leaving, Jacobs told Reuters in an interview.
"Our executives are very talented and very sought after,"
Jacobs said, when asked by Reuters whether the promotion was
related to an offer from Microsoft.
"The timing is a little faster than we originally planned
but the key thing is to make sure we kept management
continuity," Jacobs said.
Jacobs and Mollenkopf declined to specifically discuss
Microsoft or whether Mollenkopf had a job offer from the world's
largest software company, which is seeking a candidate to
replace retiring CEO Steve Ballmer.
On Thursday, Bloomberg News reported that Microsoft has been
considering Mollenkopf as a candidate for CEO.
"He would have been an awesome (Microsoft) CEO," said FBR
analyst Chris Rolland. "But Qualcomm didn't want to lose him,
and it makes sense to me."
"If I were the son of a founder of a $130 billion company, I
would want to make sure I have the top guy behind me - and Steve
is definitely that guy," Rolland said.
Removing Mollenkopf from the shortlist of CEO candidates at
Microsoft could complicate matters for its board. The company
was down to a "handful" of candidates with no clear leader,
sources familiar with the matter told Reuters this
Mollenkopf, 44, will take the reins in March, as Qualcomm
faces a shift in smartphone growth away from the United States
toward China, where it faces an antitrust investigation and
where consumers often spend less on their phones.
Qualcomm shares were flat at $72.73 on Nasdaq, suggesting
investors saw little impact from the change.
Jacobs, who replaced his father Irwin as Qualcomm CEO in
2005, will serve as executive chairman and focus on developing
new technology and long-term opportunities, the company said.
"Paul is a visionary guy and Mollenkopf really knows how to
run things. So I think this division of labor makes a ton of
sense, although it's a little earlier than I would have
expected," said Bernstein analyst Stacy Rasgon.
Under Jacobs, Qualcomm, founded in 1985, has become the top
chip supplier for smartphones and its stock value has surpassed
that of Intel Corp. Intel is still the world's largest
chipmaker by revenue but is struggling to gain a foothold in
Investors have been urging Qualcomm to give back more of its
profits, and last month Jacobs promised to return three-quarters
of its free cashflow to shareholders.
Mollenkopf, an engineer, led Qualcomm's $3.1 billion
acquisition of radio frequency chipmaker Atheros Communications
Inc in 2011, its biggest acquisition. He will replace Jacobs on
March 4, after the annual shareholder meeting.
Under Jacobs' leadership, the company's share price has more
than doubled, giving Qualcomm a market capitalization of over
$120 billion, while earnings have tripled. The Philadelphia SE
Semiconductor Index has risen just over 20 percent in the
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
"If anything, Mollenkopf in the lead means (an) intense
commitment to the semi business," said Argus Research analyst
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, which assembles most of the world's
top-selling electronic gadgets including Apple Inc's
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