The head of a mutual fund with 8.3 million shares in Qualcomm says he opposed Broadcom's now-aborted $117 billion takeover bid, thinking Qualcomm can do better -- so long as it settles its legal battles with Apple.
"There's no doubt I would have made a quick profit if the Broadcom deal had gone through," Parnassus Investments CEO Jerome Dodson told the New York Times. "But as a shareholder, I voted against it."
U.S. President Donald Trump recently intervened to block the bid. Dodson said he supported the Trump administration's view that Broadcom's likely cuts to research and development at Qualcomm would give Chinese firms an edge in 5G technology, in theory posing a national security risk.
On an investment level the executive argued that if Apple and Qualcomm can settle, the latter's revenues should surge and push its stock price well beyond the $79 per share Broadcom was offering, to $84 or more.
In fact Dodson reportedly met with a group of Qualcomm officials in late February, including CEO Steve Mollenkopf, using the opportunity to push for a settlement. Dodson said he argued that it wasn't worth alienating Apple as a customer, but the Qualcomm team insisted that Apple was asking for more than it was willing to give, and that on an engineering level the two companies' relationship was still good.
The officials added that a settlement would eventually be reached, returning Qualcomm's situation to normal.
Apple has called on Qualcomm to stop charging licensing fees as a percentage of a device's cost, a particularly high expense in the case of the $999-plus iPhone X. The situation means that companies like Apple are often paying more than vendors of low-cost smartphones, despite using the same cellular technology.
Qualcomm has worried that if it goes that route, it will have to offer the same terms to all of its big customers, seriously impacting revenues. Dodson said the Qualcomm officials told him they offered to amend the Apple agreement without changing its general licensing policy, but Apple turned this down.
The executive lastly suggested that amid rumors Intel might bid for Broadcom, it should buy Qualcomm instead.
"Why doesn't it bid for Qualcomm? If Intel bought it, Qualcomm would be in good hands," he remarked. "As a citizen, I'd be very comfortable with that."
Apple uses a mix of Intel and Qualcomm cellular chips in iPhones. Some rumors have suggested Apple could go Intel-only in future models, taking advantage of modem upgrades.