Qualcomm Incorporated: Ignoring The Legal Risk Is Patently Ridiculous

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About: QUALCOMM Incorporated (QCOM)
by: Kerrisdale Capital Management
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Kerrisdale Capital Management
Hedge fund manager, long/short equity, value, special situations
Summary

Qualcomm is likely to lose in an ongoing trial pitting the company against the U.S. Federal Trade Commission, the latest development in a global regulatory crackdown on the company’s business.

The presiding judge is likely to force Qualcomm to renegotiate existing contracts and license its patents to its competitors, potentially cutting its earnings in half.

Beyond its pending FTC loss, Qualcomm’s current business case is bleak. The handset market is saturated and may begin declining; Samsung and Apple are in-sourcing processors.

Source note: many of our footnotes point to court filings that can be obtained from PACER (Public Access to Court Electronic Records), a U.S. government service, for items denoted with a superscript number. While we