Qualcomm CEO Steve Mollenkopf hasn’t even had one annus horribilis, the favorite Latin word of Queen Elizabeth for a miserable year. He had 3 or 4—in a row.
China fined Qualcomm $1 billion four years ago and ruined its lucrative agreements to sell its mobile chips to phonemakers there. Antitrust investigations then arrived in South Korea and the USA. And all this was nothing compared to when Apple, its biggest client, sued and then stopped charging, ultimately moving all of its iPhone modem market to Intel in 2017. Finally, last year, Mollenkopf’s $44 billion offer was thwarted by regulators to acquire NXP semiconductors and win a large market place for car chips. The stock price of Qualcomm tumbled from nearly $70 to less than $40.
So why was Mollenkopf in New York City that bright and chipper Tuesday morning? The silver-haired CEO played host to 100 or so Wall Street analysts and investors in a sleek blue suit and red patterned tie at an event I attended. A procession of top Qualcomm executives clarified how the company was preparing to take advantage of the coming wave of 5 G phones and increase the number of connected devices measuring anything from crop water to highway traffic. “There is a lot of hard work behind us,” remarked Mollenkopf in his introduction.
Here’s the litany of good news: Apple is back in the fold, and the stock price is hitting $90, heights only seen in the Internet bubble two decades ago. Qualcomm has grown from selling modems and processors in phones to other pieces, including antennas and power modulators, even with global smartphone sales falling. The company’s typical 5 G phone generates 50 percent more revenue than it does on older 4 G phones. A solid and that unit has been developed which sells infotainment systems for cars that have loads of potential for self-driving vehicles. And Qualcomm is again trying to break Intel’s near-monopoly on chips for PCs and servers, this time with a few exciting new efforts exploiting their strengths — see, for instance, the Qualcomm processor inside the sleek new Surface X tablet from Microsoft.
It is an remarkable recovery, but still not quite adequate. Investors on the stock market were frustrated by the prediction that revenue will only rise by 10 percent or more a year for the next three years, with profits only rising marginally faster.
And by the end of Tuesday, Qualcomm’s shares slid 3 per cent. Although Mollenkopf and his team indicated that their prediction may be too optimistic, some analysts were still upset.
“A little math suggests conservatism is likely at play here,” longtime chip analyst Stacy Rasgon at Bernstein Research wrote in a report that I received after the meeting. “But by the same token, this is also a management team that has over-spent their credibility budget in the past, so it is never possible to entirely dismiss the worry that something else might be going on.”
(Programming note: Robert Hackett’s cybersecurity edition of Data Sheet will be in Thursday’s issue this week.)
Aaron Pressman
Twitter: @ampressman
Email: aaron.pressman@fortune.com
We are building a new edition of Fortune, by the way. We will appreciate your confidential input on our products and services while you are here. You are invited to become part of our Global Advisory Board.