Today Qualcomm proudly "announced that it has entered into accelerated share repurchase agreements (ASR Agreements) with each of Bank of America, N.A., Citibank, N.A. and Morgan Stanley & Co. LLC to repurchase an aggregate of $16 billion of Qualcomm's common stock, with an initial delivery to Qualcomm of approximately 178 million shares in the aggregate". Qualcomm CEO Steve Mollenkopf notes that the company is "continue to execute on [its] previously announced $30 billion stock repurchase program."
A few days ago, Qualcomm's stock hit $70 for the first time in three years.
It's just that all this good news is in stark contrast to what Qualcomm's lead counsel, Cravath's Evan Chesler, told Judge Gonzalo Curiel of the United States District Court for the Southern District of California about a year ago when Qualcomm was seeking a preliminary injunction requiring four Apple contract manufacturers to make royalty payments prior to a final ruling on the Apple v. Qualcomm dispute. Judge Curiel didn't buy Qualcomm's "irreparable harm" theory and denied the motion. The course of events since--showcased by this week's news on Qualcomm's stock price and the share repurchase programm--clearly has validated the judge's decision. It means Qualcomm has tens of billions to distribute, but claimed that Apple, through its contract manufacturers, withholding half a billion a quarter would put the whole company in jeopardy.
Just like in yesterday's post on a previously-unknown antitrust complaint lodged by Apple against Qualcomm in the EU, which has given rise to preliminary investigations, I'll point to MLex. Mike Swift reported on the San Diego hearing last year:
"The house is on fire when one the largest manufacturers in the world says I'm watching [what's happening in the Apple litigation] and I'm telling you that I'm stopping all payments as well," Qualcomm lawyer Evan Chesler said at a hearing in San Diego, California. "It ought not to be the case that the house must burn down before we can restore the status quo." (emphasis added)
The discrepancies between Qualcomm's courtroom arguments and shareholder communications (and financial facts) have previously cost Qualcomm credibility with financial analysts. Shortly after the said hearing, Barron's quoted Bernstein analyst Stacy Rasgon who found "the magnitude of the disparity troubling."
That report came a week after I had stated essentially the same thing on this blog.
If I were in Qualcomm's shoes, I'd really hope Judge Curiel isn't aware of Qualcomm's investor relations announcements, such as (especially) today's news of the acceleration of its huge share repurchase program. In case he is aware, Qualcomm will have an even bigger credibility problem with him than with some analysts or bloggers.
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