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Qualcomm Shares Plunge on Its Disclosures of New FTC, EC Probes

Qualcomm shares closed down 8.6 percent Thursday at $70.58 on the company’s disclosure in its 10-K SEC filing the previous evening that it’s the subject of two new regulatory investigations into its competitive practices. The FTC notified the company Sept.…

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17 that it has launched a probe into Qualcomm's licensing business, including a possible "breach" of its commitment to license its technology on fair, reasonable and nondiscriminatory terms, the 10-K said. Then on Oct. 15, the European Commission notified Qualcomm it was investigating the company’s sales and marketing of its baseband chipsets and possible irregularities in its use of rebates and other "financial incentives," the filing said. "We are fully cooperating with these agencies and believe our practices comply with the laws of our countries, but given that these matters are in their early stages, it is difficult to predict what, if anything, will come of them," CEO Steve Mollenkopf said on an earnings call Wednesday. The two new probes are in addition to a year-old investigation by China’s National Development and Reform Commission that Qualcomm may have violated Chinese anti-monopoly laws, the 10-K said. As key mobile technologies are increasingly becoming adopted into new categories, Qualcomm is "well-positioned" to exploit "these evolving opportunities," Mollenkopf said. Citing Gartner estimates that more than 8 billion smartphones will be sold globally through 2018, Qualcomm sees the smartphone as "representing the largest technology platform on which to innovate and drive upgrade opportunities," he said. "We believe the smartphone will be central to the growing number of connected things around us, and our focus is on aligning our resources to continue to capture these opportunities." Qualcomm is "very pleased with our design activity in the premium tier" of smartphone components, including "flagship devices" like the Snapdragon 805, Qualcomm’s first processor to offer "system-level Ultra HD support and 4K video capture and playback," he said.