(Corrects Mollenkopf age in fifth paragraph to 44 from 41;
index rise in paragraph 12 to just over 20 percent from just
over 10 percent)
By Sruthi Ramakrishnan and Sinead Carew
Dec 13 (Reuters) - Qualcomm Inc promoted Chief
Operating Officer Steve Mollenkopf to chief executive in a
surprise move that follows investor pressure on the phone
chipmaker to return capital and speculation that he might be
poached to run Microsoft.
The replacement of current CEO Paul Jacobs, the 51-year-old
son of a Qualcomm co-founder, comes a day after Bloomberg News
reported that Microsoft has been considering Mollenkopf as a
candidate to replace retiring CEO Steve Ballmer.
"Obviously Paul is still a very young man, so (this is) not
something that many of us were expecting but something that has
likely been in the works for some time," said Williams Financial
Group analyst Cody Acree.
"I think the consideration of Microsoft of Mollenkopf may
have prompted a bit of a speedier announcement."
Mollenkopf, 44, will take the reins at the world's biggest
maker of cellphone chips in March, as Qualcomm faces an
antitrust investigation in China, its largest market.
At least one investment fund has been pushing for a return
of capital to shareholders, among other options. The company had
a cash pile of $29.4 billion as of Sept. 29.
Qualcomm shares were up 0.7 percent at $73.21 in
late-morning trading on the Nasdaq, suggesting investors saw
little impact from the unexpected change of CEO.
"We believe that Mollenkopf had effectively been running the
day-to-day operations of the company, so we don't expect daily
operations to change materially," JPMorgan analyst Rod Hall said
in an email.
Mollenkopf led Qualcomm's $3.1 billion acquisition of radio
frequency chipmaker Atheros Communications Inc in 2011, its
An engineer, he will replace Jacobs on March 4, after the
annual shareholder meeting.
Jacobs has been CEO since 2005, taking over from his father
Irwin who co-founded Qualcomm in 1985.
Under the son's leadership the company's share price has
more than doubled and earnings have tripled. The Philadelphia SE
Semiconductor Index has risen just over 20 percent in the
While most of Qualcomm's revenue comes from chips that allow
phones to communicate with carrier networks, most of its profit
comes from licensing patents for its CDMA cellphone technology
-- a component in new fourth-generation mobile phones.
Mollenkopf focuses mostly on the semiconductor side of the
business, said Argus Research analyst Jim Kelleher.
"If anything, Mollenkopf in the lead means (an) intense
commitment to the semi business," he said.
Morningstar analyst Brian Colello said the appointment
brought important continuity to Qualcomm's chip leadership team
at a time when its dominance in almost all high-end phones faces
challenges from the likes of Intel Corp.
The antitrust investigation in China will be a key concern
for the new CEO. China's top economic planning agency has
substantial evidence against Qualcomm, state media quoted a
senior official as saying on Thursday.
Half of Qualcomm's revenue comes from China, including
Foxconn Technology Group, the assembler of most of the world's
top-selling electronic gadgets including Apple Inc's
Most of the chips the company sells in China are used in
devices that are exported. But domestic Chinese sales make up
around a fifth of Qualcomm revenue and it is positioned to reap
the vast majority of licensing fees for phone chips in the
world's biggest smartphone market.
Qualcomm denies any wrongdoing and says it is cooperating
with the probe, which analysts say is likely tied to royalty
negotiations ahead of the impending $16 billion rollout of
commercial fourth-generation services by China's big telecoms
(Additional reporting by Nadia Damouni; Writing by Rodney
Joyce; Editing by Kirti Pandey and Ted Kerr)