What’s Next for QUALCOMM, Inc.’s (QCOM) Licensing Business? William Blair Weighs In

Skepticism Circles Qualcomm's Licensing Business Following President's Departure


What is to become of QUALCOMM, Inc. (NASDAQ:QCOM), a chip-making empire, now that once December 31st hits, President Derek Aberle will be leaving the doors of a company that was already standing under legal fire? Notably, this is the very man who successfully guided the company through multiple legal crises shrouding the licensing business (QTL) that he nurtured for the better part of a decade. As Aberle wraps up 17 years at the giant’s helm, can Qualcomm’s QTL segment withstand another key blow or will it buckle in the wake of a pivotal leader jumping ship?

“Mr. Aberle’s departure only adds to the company’s ongoing headaches with its licensing segment and we believe it could not have come at a worse time,” opines analyst Anil Doradla of William Blair. Highlighting Aberle’s decisive role, the analyst emphasizes how the leader was “crucial and instrumental in shaping Qualcomm’s licensing strategy for over a decade and has been credited for the company’s success with multiple legal challenges it has faced,” adding that in light of the announcement, “We are incrementally skeptical of Qualcomm’s licensing business model.”

Offering three possible rationales behind Aberle’s move, the analyst underscores that “Whatever the reason, the departure of the senior most executive in the licensing business will be viewed as increasing uncertainty and does not bode well for the company.” Aberle’s departure, from Doradla’s point of view, is based upon either: “1) His own choice as the press release suggests; 2) recent failures on the licensing front took a toll on his job (more likely, in our opinion); or 3) […] a new strategic direction on the licensing front (highly unlikely, in our view).”

With this in mind, the analyst maintains a Market Perform rating on QCOM stock without providing a price target. (To watch Doradla track record, click here)

TipRanks analytics exhibit QCOM as a Buy. Out of 18 analysts polled by TipRanks in the last 3 months, 6 are bullish, while 12 are sidelined on QUALCOMM stock. With an upside potential of 18.95%, the stock’s consensus target price stands at $61.89.