Qualcomm Inc. (NASDAQ:QCOM) Facing European Union Investigations – Likely To Pay $2.5 Billion in Fines

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By Stefan Larson on August 28, 2014 Technology & Software

Qualcomm Inc. (NASDAQ:QCOM) is the biggest mobile chip manufacturer company in the world. The company has been alleged time and again for using its dominant position in the market for monopolistic purposes.

The company is expected to face a regulatory investigation by the European Union. It is important to note here that the semiconductor chip maker will face this investigation in lieu of a complaint that was made almost 4 years ago.

Qualcomm Inc. (NASDAQ:QCOM) currently has a #3 Zacks rank on its stocks with a consensus rating of ‘Hold’.

Qualcomm Inc. (NASDAQ:QCOM) is facing the latest investigation on Icera’s complaint that the British company lodged back in 2010. According to Icera, Qualcomm Inc. (NASDAQ:QCOM) was using its patent incentives and lucrative to offer the Icera’s clients the same products at a much lower prices, thus snatching Icera’s customers away from the company by using unfair and improper ways.

The British chip maker company, Icera, was purchased by NVIDIA Corp. (NASDAQ:NVDA) in 2011. It is pertinent to note here that NVIDIA is a rival of Qualcomm Inc. (NASDAQ:QCOM). Sources have it that Qualcomm is likely to face a fine that can exceed $2.5 billion if the company is found guilty of monopolistic practices.

The competition authority of European Union takes years to take notice of the complaints filed by the companies. The Union fined Intel Corporation (NASDAQ:INTC) in June 2014 for using its dominant position in the semiconductor sector of the market to gain unfair advantages. Intel was punished with a fine of $1.45 billion.

Qualcomm was given a pardon back in 2010 by the European Union when Ericsson A.B. and Texas Instruments Inc. withdrew their complaints against Qualcomm from the Union.

Qualcomm is not only facing problems in the European region, the company is also facing troubles in the country of China. The regulatory body of China, National Development and Reform Commission, started its investigations into the respective company in November 2013 for the use of monopolistic practices.

According to Xinhua, a Chinese newspaper that is run by the State, Qualcomm is likely to face a fine of $1.2 billion for breaking the anti-monopoly regulations. The newspaper further stated that the amount of fine can exceed the reported value depending on the fault of the company. Sources have it that the company might lose the royalties from TDD-LTE as well; if this happens, Qualcomm will have severe effects on its patent portfolio.

Coming to the stock prices of Qualcomm Inc. (NASDAQ:QCOM), the company, on the last trading day, August 27, 2014, started its stocks at a price of $77.15 and closed at a decreased price of $76.97. The intraday range for the company’s stocks was recorded to be from $76.49 to $77.19.

The company has a total market capitalization of $129.07 billion with a P/E (price to earnings) ratio of 18.53. As far as the dividend yield of the company’s stocks is concerned, the numbers are recorded to be around 2.18 percent. The company’s 52 week high and low is at $81.97 and $65.47 respectively.