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Corner Office: He’s Stared Down Activists and Apple, and Is Still in Charge

7-9 minutes - Source: NYT

Steve Mollenkopf has faced his share of challenges as the chief executive of Qualcomm. Soon after he took the job in March 2014, the company’s stock plummeted by more than 40 percent as investors grew wary of the chip maker’s prospects. An activist investor agitated for change, urging the company to break itself up.
Qualcomm then got ensnared in a nasty two-year legal battle with Apple, one of its largest customers. The high-stakes dispute was settled last year, just as a trial got underway.
In the midst of that fight, the company faced several other crises. It cut some 1,500 jobs in an effort to slash costs. It faced a $117 billion takeover attempt by Broadcom, only to see that deal vetoed by President Trump. And when Qualcomm tried to acquire NXP for $44 billion, it had to abandon its effort after opposition from the Chinese government.
Is Mr. Mollenkopf surprised to have survived such a turbulent run?
“Not really,” he said. “This is going to sound immodest, but it actually played out the way that we thought it was going to play out.”
A Qualcomm lifer, who started as a junior engineer at the San Diego company straight out of graduate school, Mr. Mollenkopf has put most of those challenges behind him. Today, the company’s stock is near an all-time high, and he expects the pending adoption of 5G technology to be very good for business.
Yet new challenges are emerging. Qualcomm derives almost half of its revenue from China, and there are concerns that the coronavirus outbreak could hurt sales.
This interview, which was condensed and edited for clarity, was conducted in New York.

What was your childhood like?
I had a very typical upbringing in Baltimore. Both my parents were in education. My dad was eventually a principal and my mother was a research librarian. I had a lawn business. I worked as a cashier in a supermarket for a while. I played a lot of sports. I went fishing and spent a lot of time on Chesapeake Bay.
When did you get interested in technology?
I got the engineering bug in high school. I originally wanted to go into mechanical engineering, but all the schools were oversubscribed at the time, and so you had to compete for the more desirable majors. I ended up doing well, and then I had the choice of what to do. I asked the schools which one was the hardest, and they all said electrical. I said, “I’ll take that one.” That is a stupid way to pick a career choice, but it worked out.
How did you get to Qualcomm?
When I graduated, it was hard to get a job and my brother sent me a little clip from a paper about this company called Qualcomm. I went for an interview and thought everybody was smarter than me, and they offered me a job. I told my wife, “Maybe we’ll only be there for a year, because I don’t know how the company will do.” This was when the debate was: Will people need cellphones or not?
Tell me about moving into management roles there.
At Qualcomm you end up having to lead teams on a project basis, with the teams made up of people from different departments that don’t report into you. So you learn how to influence people that don’t have to listen to you.
How do you do that?
You have to have enough technical chops that people respect your opinion when you have to deliver it. And then you need to be judicious in the way in which you deliver the opinion.
Ninety-five percent of the time, the organization is going to do the right thing, and you go through a process that allows people to reach consensus. Then there’s five percent of the time when you have to take the lead and do something that’s unpopular. But you can’t do it unless you have the technical expertise and people respect you enough to even include you in the discussion.
And you were able to earn some patents along the way.
Unremarkable from a Qualcomm perspective. We have people that have hundreds of patents in areas that are fundamental to industries. Mine are not the best ones.

How did you move through up the ranks?
I got to work on the projects that in many respects were the company betting against itself. I ended up always finding myself in a leadership role on all those projects, the very important backup plans. If people were just looking to manage their career, they would avoid those things. But for me, I found them to be a real opportunity.
In some cases, I had a difficult time convincing some engineers to join the projects because they were like, “Our company doesn’t think that’s the No. 1 project.” And I said, “Yeah, but it will be in like five years.”
Is the situation with Apple destined to repeat itself again in a few years?
I don’t think so. It was a commercial dispute. There was a lot of money at stake. But these two companies know how to do this, and it ultimately played out on the courthouse steps. My guess is that two companies will probably resolve stuff next time. I do not think it was good for either company, really.
And as you were dealing with Apple, your offer for NXP fell apart.
We really thought this thing was going to get done, but we had very bad timing. It was sitting in the middle of a trade dispute, and this was not the time for a big acquisition to get through. It became very clear that it wasn’t going to get through and we needed to move on, and we made the call.
What’s the justification for a huge stock buyback program when the company has also undergone layoffs in recent years?
People conflate buybacks with cash flow. Your ability to keep employees is really related to cash flow. That’s what allows you to invest in new projects and all that kind stuff. Having a strong balance sheet is really about, what can you do. That’s something that the investors own and you have to deploy it in a way that they get a return. And so the fact that a company has a strong balance sheet really doesn’t mean it’s immune from some of the things that are hard to do as a company.
Qualcomm has a lot of people who have very similar backgrounds to mine, lifers who have been there a very long time. So it’s very difficult for us all. Anyway, it’s something that hopefully is behind us.
How have the Trump administration’s trade policies impacted the company?
Probably less so than others. We don’t have a large business directly with Huawei, and people that have direct business into Huawei, particularly in their infrastructure business, have probably been impacted more than others. And we have had a very solid China business during all of these talks, believe it or not.
What does the future of Qualcomm look like?
It’s basically 5G. Think of it like when electricity replaced steam. Who’s going to win, who’s going to lose? The reason that you see so much international competition for the leadership of 5G is because it is so important to the fundamental way in which economy works.
The first 5G wave will be a handset wave, which is very good for us, and will continue for a long time. But there’s a second wave — with artificial intelligence, the cloud and all that data. That second wave makes me think, “Wow, we are on the cusp for something very big.”
You’ve been able to keep out of a lot of the social and political debates that have entangled other technology companies.
We still have the same issues, but we’re not a public facing company. We are behind the scenes, providing the technology that makes the pie grow. We try to keep a low profile.
We are also a big employer in San Diego and you have a little bit of a responsibility to do the right things for that community to the degree that you can. It doesn’t mean you don’t have to do hard things, but I think we’ve benefited from that ethos.


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