Qualcomm Taps Son to Succeed CEO Dad
Qualcomm Inc., the No. 2 maker of chips that run mobile phones, on Tuesday named Paul Jacobs to succeed his father as chief executive in July, passing over President Anthony Thornley.
Irwin Jacobs, 71, who co-founded the company two decades ago, will remain chairman, the San Diego-based firm said. Thornley will leave the company.
Paul Jacobs, 42, joined Qualcomm in 1990 and will take over as rising demand for the company’s chip designs is driving higher royalty payments. As leader of the wireless and Internet group for the last four years, the younger Jacobs made his mark developing products that offer high-speed Internet connections, e-mail and video capabilities.
“He does happen to be a son of the founder, but he’s demonstrated clear leadership already,” said Sandy Sanders, an analyst with Evergreen Investment Management in Boston, which owns 2.7 million Qualcomm shares.
The company made the announcement at its annual meeting of shareholders.
Qualcomm was one of the biggest stars of the late-1990s tech-stock boom. The stock soared from a split-adjusted $2.43 a share at the end of 1996 to as high as $100 in 2000.
The price plunged with other tech issues from 2000 to 2002, but the stock, and the company’s earnings, rebounded sharply in 2004. In January, however, the shares dived after Qualcomm warned that its near-term earnings would miss estimates.
The stock got a lift on Monday when the company modestly raised its near-term profit outlook. The shares fell $1.10 to $36.29 on Nasdaq on Tuesday after the succession news.
Irwin Jacobs, who co-founded Qualcomm in his La Jolla house in 1985, helped develop a wireless technology known as code division multiple access, or CDMA, now used by 240 million consumers worldwide. He promoted CDMA as offering wireless system operators greater call capacity and better voice quality.
The technology is now used in networks operated by Verizon Wireless and Sprint Corp. Qualcomm receives more than $1 billion a year in royalties for phones that use the technology.
Paul Jacobs, whose ascension was unanimously approved by Qualcomm’s board, will need to confront the rising threat from Texas Instruments Inc., the biggest maker of chips for phones operating on the so-called global system for mobile communications, or GSM, which rivals CDMA and is the dominant technology in Europe.
“What this company needs from a CEO for the next two decades is far different from what the company needed for the last two decades,” said John Bucher, an analyst at Harris Nesbitt Corp. in Los Angeles. “The top executive needs to have a strong technical background. At his heart, Paul’s an engineer.”
Irwin and Paul Jacobs both hold doctorates in electrical engineering. Irwin Jacobs’ younger son, Jeff, is president of global development. Combined, the Jacobs family owns more than 44 million Qualcomm shares.
Paul Jacobs did well as leader of the company’s handset division, which he sold to Japan’s Kyocera Corp. in 2000, said Piper Jaffray & Co. analyst Michael Walkley. “He proved it would work,” Walkley said. “Without having working handsets, CDMA never would have gotten off the ground.”
Separately on Tuesday, Qualcomm said it raised its quarterly dividend 29%, from 7 cents to 9 cents a share. The company also said it would double a stock repurchase program, to $2 billion.
Steven Altman, 43, will replace Thornley, 58, Qualcomm said. Altman joined Qualcomm in 1989 and leads its technology licensing business.
