![](http://investorshub.advfn.com/images/default_ih_profile2_4848.jpg?cb=0)
Tuesday, April 19, 2005 9:21:08 AM
April 19, 2005, 4:00 AM PT
By Dave Mock
http://news.com.com/Like+father,+like+son/2010-1022_3-5675693.html?part=rss&tag=5675693&subj...
It seems not a week goes by now that the corporate landscape in America isn't being reshuffled. But in a period marked by turmoil, extreme corporate makeovers and outright scandal at some of America's biggest companies, a little predictability goes a long way.
Even within the walls of companies that take no part in megamergers, managing changes in the executive team requires a delicate touch. San Diego's wireless mainstay Qualcomm was facing such a dilemma with the pending retirement of its founder and CEO, Irwin Jacobs. Jacobs had been at the helm of the wireless technology giant since Day One. For almost 20 years he has guided the company, turning it from a little-known defense contractor into a feared, respected--and sometimes loathed--wireless IP powerhouse.
While the major concern of investors and the Qualcomm board was who would succeed Jacobs as CEO, evaluating just how and when he would pass the baton was a fragile matter as well. A committee within Qualcomm's board took nearly three years to evaluate and craft a succession plan, knowing full well that Jacobs' shoes could not be easily filled. Qualcomm's identity and that of its unassuming leader were intimately tied, unlike companies that sign on new executives for each phase of their existence.
The main question in the mind of investors was whether the CEO position would be kept in the family by passing the role to Jacobs' son Paul. Paul Jacobs had been with the company since 1990 and played an increasingly important role in developing key technologies and products. But even with the younger Jacobs' qualifications, investor appetite for corporate dynasties has waned in recent years, for good reason.
Qualcomm's identity and that of its unassuming leader were intimately tied, unlike companies that sign on new executives for each phase of their existence. Academic research, such as a study by Wharton professor Raphael Amit and Harvard Business School professor Belen Villalong, outlined a "founder effect" in family-owned companies. After analyzing all Fortune 500 companies between 1994 and 2000, the paper determined that companies with founders' descendents in the CEO role retained significantly less value for shareholders. The ideal case was when a founder remained CEO and chairman, or hired a CEO while acting as chairman.
Investors still had a bad taste in their mouth from Motorola's fall from grace and ensuing struggle to regain its prominence in the wireless market. After slipping behind Nokia and losing share more recently to Samsung under the reign of Christopher Galvin (descendent of founder Paul Galvin), the company finally decided to remove family leadership and bring in outsider and former Sun Microsystems executive Ed Zander.
In the end, even against the backdrop of failures past, Qualcomm's board of directors stayed in the family and selected Paul Jacobs to succeed his father as chief executive this coming July. The reason had a lot to do with the culture at Qualcomm, which is unique and slightly eccentric when compared with peers. Bringing in a CEO from outside the company would risk disrupting a strong employee moral base, one that is rooted in technical achievement.
The reason had a lot to do with the culture at Qualcomm, which is unique and slightly eccentric when compared with peers. What makes Qualcomm a rare company is the pedigree of the founders and the culture that has developed within. Qualcomm's business hinges on technical excellence, and it drives every aspect of company operations. Having come from the world of academia, Irwin Jacobs founded Qualcomm with a small group of highly skilled and visionary engineers. Paul Jacobs follows this lineage, with a Ph.D in engineering like his father.
One telling story exemplifies the nature of the organization: One year when the University of California school system significantly raised its student fee levels, many employees found that the fee reimbursement offered by the company no longer fully covered expenses. (Qualcomm has always been a big proponent of continuing education within its ranks.) The president of the engineering group petitioned to change the policy and raise the reimbursement rate for employees, but was rebuffed by the corporate human resources group as the policy was already quite generous in comparison to peers.
After an appeal to higher authority however, the HR group was instructed to ignore peers and accommodate the change. Few corporations I know of today have an engineering group with enough authority and weight to change corporate policy.
For a company strongly aligned along a passion for technology, Qualcomm is likely better off taking the high odds and staying within its technical team for leadership. Otherwise the entrance to the executive office might become a revolving door.
biography
Dave Mock is author of The Qualcomm Equation and a wireless analyst with Currentofferings.com.
Recent QCOM News
- Form 8-K - Current report • Edgar (US Regulatory) • 08/09/2024 08:05:49 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/09/2024 08:05:43 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/09/2024 08:05:27 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 08/08/2024 09:01:47 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/05/2024 09:03:28 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 08/02/2024 08:01:38 PM
- Qualcomm Gewinnmitteilung auf der Investor Relations Website des Unternehmens verfügbar • Business Wire • 07/31/2024 10:50:00 PM
- Publication des résultats de Qualcomm disponible sur le site web de la société consacré aux relations avec les investisseurs • Business Wire • 07/31/2024 10:50:00 PM
- Form 10-Q - Quarterly report [Sections 13 or 15(d)] • Edgar (US Regulatory) • 07/31/2024 08:02:08 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 07/31/2024 08:01:12 PM
- Qualcomm Earnings Release Available on Company’s Investor Relations Website • Business Wire • 07/31/2024 08:00:00 PM
- US Index Futures Up Ahead of Fed Decision; Oil Prices Surge Amid Middle East Tensions • IH Market News • 07/31/2024 10:01:30 AM
- AMD Shares Surge 9% on Earnings Beat; Match Group Rises 10%, Pinterest & Lemonade Drop 13%, and More Earnings Updates • IH Market News • 07/31/2024 09:59:10 AM
- Qualcomm gibt Datum der Ergebnismeldung für das dritte Quartal 2024 und der Konferenzschaltung bekannt • Business Wire • 07/19/2024 08:32:00 PM
- Qualcomm annonce qu’elle va publier prochainement ses résultats pour le troisième trimestre de l’exercice 2024 et qu’elle tiendra une conférence téléphonique • Business Wire • 07/19/2024 04:22:00 PM
- Qualcomm Schedules Third Quarter Fiscal 2024 Earnings Release and Conference Call • Business Wire • 07/19/2024 01:00:00 PM
- Qualcomm gibt Quartalsbardividende bekannt • Business Wire • 07/17/2024 06:43:00 PM
- Qualcomm annonce le versement du dividende en espèces trimestriel • Business Wire • 07/17/2024 06:43:00 PM
- Qualcomm Announces Quarterly Cash Dividend • Business Wire • 07/17/2024 01:00:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/08/2024 09:39:01 PM
- U.S. Index Futures Mixed Following Tech Sell-Off, WTI and Brent Crude Dip Slightly • IH Market News • 06/25/2024 10:37:15 AM
- Trump Media Resells Stocks and Warrants; KB Home Exceeds Q2 Expectations, and More News • IH Market News • 06/20/2024 10:55:11 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/04/2024 08:07:43 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/04/2024 08:07:25 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 06/03/2024 09:27:46 PM
Maybacks Global Entertainment and ZEASN Technology Private Ltd. Sign Global Licensing Agreement • AHRO • Aug 8, 2024 7:00 AM
SANUWAVE Will Host a Conference Call on August 13, 2024 at 8:30 AM (ET) to Present Q2 Financial Results • SNWV • Aug 8, 2024 6:59 AM
Kona Gold Beverage Inc. Signs Letter of Intent with Bemax, Inc. to Sell Kona Gold, LLC • BMXC • Aug 7, 2024 10:00 AM
Btab Ecommerce Group, Inc. Launches Investor Connect AI Chatbot for Enhanced Investor Engagement and Lead Generation • BBTT • Aug 7, 2024 9:00 AM
Hydromer, Inc. Announces Preliminary Unaudited Second Quarter 2024 Financial Results and Provides Business Update • HYDI • Aug 7, 2024 8:52 AM
North Bay Resources Announces Mt. Vernon Gold Mine Startup, Sierra County, California • NBRI • Aug 5, 2024 9:00 AM