With the July 25th Qualcomm (NASDAQ:QCOM) / NXP Semiconductors (NASDAQ:NXPI) “walk date” approaching, "we still think that waiting for China’s approval from MOFCOM is the best alternative for QCOM shareholders," Morgan Stanley analyst James Faucette says in a note to clients.
"We have been surprised that some have begun to advocate that maybe Qualcomm should just “move on” from its NXPI bid." Firm is not convinced, says QCOM's issues (maturation of the mobile phone market, difficulty collecting royalties from handset makers) have not been exacerbated by the 2-year process. Folding in NXPI is the best way to position QCOM to take advantage of new market developments (e.g., autos).
The walk-away date made sense as a bargaining chip. Ultimately the process has been delayed by trade issues rather than a willingness to get the deal done. "As such, we think Qualcomm should revise its “walk date” to be indeterminate, and instead be such time when either China actually blocks the deal or it becomes clear that an active NXPI bid is meaningfully hindering Qualcomm’s long-term opportunities."
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