Acquiring Innovation to Fuel Corporation
In light of the recent mergers between large companies, let’s take a look at smaller, historical cases.
Qualcomm represents one of the world’s leading companies in regards to the developments of technology in order to further the utility and scope of next-generation mobile technologies.
These developments are not only limited to digital communications but also include software innovations with the purpose of the company being to provide the highest and most efficient methods of information transfer and integration of social communities through its technology.
The incorporation of Summit Microelectronics represents a pivotal even in the process of development for these new strategies, as Summit Microelectronics stands as a “leading developer and provider of programmable power integrated circuits based in Sunnyvale, CA”. (Qualcomm).
The integration of his technological firm and its hardware is expected to boost the efficiency of Qualcomm’s power management among several dimensions that we shall discuss below. To begin, this issue represents an ongoing issue, as Qualcomm and Summit Microelectronics are two separate firms and it will take time for both full integration and for the necessary technological breakthroughs that are predicted of this acquisition.
Of course, such acquisitions signal auspicious future trends for Qualcomm and can definitely be considered “good news”. Consider the benefits of the acquisition as discussed by Qualcomm in a voluntary disclosure in the form of a press release:
“The demand for more sophisticated battery management is critical in a world of increasingly smart devices with advanced computing capabilities, large high-resolution screens, and advanced modem technologies. Summit Microelectronics is a leader in providing flexible, highly integrated power management solutions…” (Qualcomm).
Since this is a press release on Qualcomm’s site that is justifying and celebrating a business choice, disclosure was by the company itself.
Moving on, Qualcomm strategically handled the news event. Though the press release was made public on the site (as in, made public by sources internal to the company), not many explicit details regarding key information on the deal was disclosed.
This meant that external speculations and investigation on the buyout were considerably limited, even though the public news outlets tried to make the most interpretations out of the given information. Consider this quote by analysts at Forbes:
“Qualcomm this morning said it has acquired…. Terms of the deal were not disclosed” (Savitz).
Another relevant electronically specialized news reporting agency made similar remarks:
“Qualcomm Inc. said Monday (June 18) it acquired a programmable power IC vendor Summit Microelectronics Inc. for an undisclosed sum” (McGrath).
Much of the material in the report are simply repeating information from the original press release, illustrating the lack of external exposure and knowledge of the internal affairs and conditions of Qualcomm’s operation during this acquisition.
Those at Yahoo Finance have also noticed the lack of information giving, stating “Financial terms were not disclosed” (Yahoo! Finance). This trend of a lack of details and specificity regarding the more elaborate areas of the acquisition show that although Qualcomm is willing to mention the acquisition as a way of enhancing its image and bolstering its relevance in the rapidly changing technological markets, it is actually reluctant to provide too much information into its financial dealings.
There were some financial analyses performed on the effect of the Qualcomm’s announcement on its stock values. One source gives the analysis that: “Qualcomm shares finished at $56.50 per share on Friday. They are down 18 percent from $68.87 in late March” (Yahoo! Finance).
This statement suggests that despite the positive portrayal of Qualcomm’s acquisition, it might be having some unexpected negative financial consequences on the total valuation of the company.
However, reactions to the event are mixed, with a report on the NASDAQ website stating that this acquisition brings a variety of benefits to the table:
“We believe that the Summit acquisition will help Qualcomm enhance the battery life of the devices, thus increasing the competitiveness of its propriety chipset solutions. The San Diego-based company already has an impressive customer base…” (NASDAQ).
So from these observations, see that in the past around a few weeks after the acquisition, the stock had dropped. This indicates a negative impact on the perception of the services and products provided by Qualcomm and decreased confidence in investors.
The image of the company was enhanced by several technological news outlets that were impressed with the statistics and credentials of the acquired Summit Microelectronics, so this represents a positive effect. Product sales are not exactly relevant to the Qualcomm firm as it provides technological solutions, but clearly, its services have been enhanced by this acquisition in a positive manner:
“Summit Microelectronics brings key expertise, technology, products, and design wins in batter charging and DC-DC converters…” (Qualcomm).
Finally, in regards to the changes in the company, there were a few main changes that were directly resultant from the merger, and these affected the areas of services provided, operations, and potentially changes by competition to match Qualcomm’s new technological acquirement. Let us consider that the operations of Qualcomm were modified in a way to accommodate the Summit Microelectronic employees:
“All employees of Summit Microelectronics have joined Qualcomm’s CDMA Technologies division” (Qualcomm).
Further, the significance of the allocation of these employees to this specific technological division had a profound impact on the solutions and produces that were being developed:
“…joining Qualcomm’s ranks in its CDMA Technologies division, which is responsible for making the company’s core radio modems and Snapdragon application processors” (Fitchard).
So according to these observations there were clear improvements in the vital technological aspects of Qualcomm through this event. On the topic of how this acquisition is affecting the behavior of competitors consider that:
“Battery technologies simply haven’t kept up with the power demands of smartphones, which has led manufacturers like Motorola and Nokia to stick larger and larger lithium-ion packs in their handsets to keep them running” (Fitchard).
In relation to these firms, which seek to compete by simply increasing the quantity of past technologies to extend battery life, Qualcomm is instead looking for new innovative technological remedies to the problem. Though the competitors aren’t exactly changing their methods, they are all feeling the pressure and racing to find new methods in the technological market for extended battery life in order to remain relevant.
Readings and References
Fitchard, Kevin. “Qualcomm Aims at Better Battery Life with Summit Micro Buy.” Gigaom. Gigaom, n.d. Web. 06 Nov. 2014. <https://gigaom.com/2012/06/18/qualcomm-aims-at-better-battery-life-with-summit-micro-buy/>.
McGrath, Dylan. “Qualcomm Buys Power IC Vendor Summit Micro | EE Times.” EETimes. N.p., n.d. Web. 06 Nov. 2014. <http://www.eetimes.com/document.asp?doc_id=1261955>.
NASDAQ. “Qualcomm Snaps Up Summit Micro — Analyst Blog.” NASDAQ.com. N.p., n.d. Web. 06 Nov. 2014. <http://www.nasdaq.com/article/qualcomm-snaps-up-summit-micro-analyst-blog-cm149581>.
Qualcomm. “Qualcomm Acquires Summit Microelectronics.” Qualcomm. N.p., 18 June 2012. Web. 06 Nov. 2014. <https://www.qualcomm.com/news/releases/2012/06/18/qualcomm-acquires-summit-microelectronics>.
Savitz, Eric. “Qualcomm Buys Summit Micro.” Forbes. Forbes Magazine, 18 June 2012. Web. 06 Nov. 2014. <http://www.forbes.com/sites/ericsavitz/2012/06/18/qualcomm-buys-summit-micro/>.
Yahoo! Finance. “Qualcomm Buys Summit Microelectronics.” Yahoo Finance. N.p., n.d. Web. 06 Nov. 2014. <http://finance.yahoo.com/news/qualcomm-buys-summit- microelectronics-121222995.html>.