Broadcom said to view Qualcomm earnings as concerning: Sources

Key Points
  • Qualcomm's guidance for the quarter ending in March was below analyst expectations.
  • Broadcom is said to be considering a "massive" break up fee to soothe anti-trust concerns.
Broadcom views Qualcomm earnings as concerning

Broadcom is said to view Qualcomm's recent earnings report as concerning, though it is still expected to raise its bid for the chipmaker shortly, sources told CNBC.

They may take into account diminished earnings near-term and their belief that Qualcomm won't be able to achieve the $7.50 earnings per share target it put out for fiscal year 2019 in its defense against Broadcom's unsolicited $103 billion bid, which it rejected last year.

But as expected, Broadcom is expected to raise its offer. It is considering a massive break-up fee, perhaps the biggest of all time, to soothe anti-trust concerns, the sources said. It could also include a material adverse effect clause.

Qualcomm reported first quarter revenue and profit that beat expectations on Wednesday, but its operating profit fell 96 percent year over year to break even as Apple and its partners continued to withhold royalty payments.

Of concern was the company's guidance for sales in the quarter ending in March, which were below analyst expectations.

Shares of Qualcomm are down 2.2 percent on Thursday.