Analysts expect Broadcom to raise further on the basis of last week's $ 105 billion offer after Qualcomm declined $ 70 a share. However, as investors expect a protracted war, Qualcomm rose just 2% in early trade.
Qualcomm chairman and co founder Owen Jacob (Irwin Jacobs) son Paul Jacob (Paul Jacobs) believes that the offer "significantly undervalued Qualcomm in mobile technology in the field of leadership value and future growth prospects." this statement apparently raised the offer left room for future.
Broadcom quickly responded that after a few hours, the company will continue to buy Qualcomm. Good chip industry mergers and acquisitions Broadcom CEO Hawke Tan (Hock Tan) said, Qualcomm shareholders said to him, they are interested in this transaction.
"Many people expressed the hope that the high and our willingness to negotiate with us." Hawke Tan said, "we still hope that the high pass and the board of directors and management cooperation interaction"
The meaning of this statement is not difficult to understand: if necessary, Broadcom may start a hostile takeover.
Analysts believe that Broadcom can easily offer up to $80 or $90 is a maximum of $130 billion. Hawke Tan has always been to actively reduce costs is known, he would cut staff, acquiring company after tightening development. Broadcom used to analysts and investors said the company could cut $3 billion from high expenses, the operating profit increased by approximately 30%. this does not take into account the end between Qualcomm and apple and other mobile phone manufacturers patent fee dispute, these matters will bring the company's annual cost of about $3 billion. He said Hawke Tan, will settle these problems soon.
"Our calculations show that Broadcom has a great space." the U.S. investment bank Bernstein analyst Stacy Lasgaon (Stacy Rasgon) on Monday wrote, "at the right time to offer up (perhaps with more aggressive behavior) it seems likely"
Canaccord Genuity investment bank analyst Mike Walker Li (Mike Walkley) wrote: "I believe that Broadcom may increase price." he believes that the two companies in Monday's statement that "Qualcomm's licensing business is still undervalued, but both sides believe that Qualcomm can solve the authorization problem with apple and other OEM vendors"
Amit Daanani, analyst at Royal Bank of Canada capital market (Amit Daryanani) said that if Hawke Tan in accordance with the usual practices, part of the business he may soon release Qualcomm, and then use the proceeds to repay debt, improve cash flow. He said in a research report on Monday, in addition to Qualcomm Market leading mobile chip business. Other departments include patents, may be retained, dispersed or closed. "
He also said: "By thoroughly adjusting Qualcomm's business model, Qualcomm will not only be able to solve a large number of customer disputes, but also solve the regulatory problems that plague Qualcomm."
However, the downgrade of Qualcomm's shares shows that investors do not think the deal can be quickly reached. Due to the ongoing disputes with Apple, and suffered a decline in revenue, as of the end of October Bendt announced intent to purchase, Qualcomm shares have soared 20% so far this year to 51 US dollars.
Qualcomm shares rose to 66 on Monday, but still lower than 70 US dollars offer. Broadcom shares have risen about 50% this year, basically unchanged on Monday, to close at 264.28 US dollars.