Market Overview

Qualcomm's Legal Issues Not Likely To Interrupt NXP Takeover

Qualcomm's Legal Issues Not Likely To Interrupt NXP Takeover

Oppenheimer said QUALCOMM, Inc. (NASDAQ: QCOM)’s legal issues won’t hurt its pending acquisition of NXP Semiconductors NV (NASDAQ: NXPI), which it had agreed to buy in October for $110.00 a share in cash, representing a total enterprise value of about $47 billion.

The earnings call of Qualcomm, which reported an in-line EPS, was focused heavily on its legal disputes with Apple Inc. (NASDAQ: AAPL), Korean FTC, EU, China and US FTC.

“We don't expect legal issues to impact the pending NXPI acquisition, and continue to expect the deal close by the end of CY17,” analyst Rick Schafer wrote in a note.

However the analyst noted that the legal issues suggest that structural headwinds continue for Qualcomm's technology licensing business (QTL), while its CDMA business (QCT) faces increased competition.

Positive On Deal

This is where diversification comes in handy. NXP, a maker of mixed-signal semiconductor electronics, is expected to boost Qualcomm’s footprint in automotive, Internet of Things, security and networking areas.

“We see the acquisition as 25+ percent accretive in CY18, assuming 50 percent of the $500 million synergy target,” Schafer highlighted.

Despite being positive on the NXP deal, the analyst maintained his Perform rating on Qualcomm shares, citing headwinds in both QCT and QTL segments.

Schafer pointed that first quarter MSM of 217 million was in line with consensus, but down 10 percent year-over-year due, in part, to losing share to Intel Corporation (NASDAQ: INTC) in Apple's iPhone 7. Also, the MSM guidance of 175 million is a 7 percent year-over-year drop.

Meanwhile, the analyst slashed his CY 2017 non-GAAP EPS estimate to $4.55 from $4.78 on higher tax rate and costs.

At last check, shares of Qualcomm were down 5.52 percent to $53.76.

Image Credit: By Ryo FUKAsawa ( [CC BY 2.0], via Wikimedia Commons

Latest Ratings for NXPI

Jan 2021Raymond JamesMaintainsOutperform
Jan 2021KeyBancMaintainsOverweight
Dec 2020Goldman SachsDowngradesBuyNeutral

View More Analyst Ratings for NXPI
View the Latest Analyst Ratings


Related Articles (QCOM + NXPI)

View Comments and Join the Discussion!

Posted-In: Analyst Color Earnings M&A News Price Target Reiteration Analyst Ratings Movers Best of Benzinga

Latest Ratings

TSLAJP MorganMaintains125.0
INTCTruist SecuritiesMaintains64.0
FBTruist SecuritiesMaintains320.0
AAPLCowen & Co.Maintains153.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at