Slide 1: Broadcom's Compelling Proposal to Acquire Qualcomm
February 2018 Broadcom’s Compelling Proposal to Acquire Qualcomm Exhibit 99.2
Slide 2: Cautionary Note Regarding Forward-Looking and Similar Statements
Cautionary Note Regarding Forward-Looking and Similar Statements This communication contains forward-looking statements (including within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amend
Slide 3: Why We Are Here
Broadcom’s Offer Provides Significantly More Value to Qualcomm Stockholders Than Any Other Alternative Qualcomm Has Repeatedly Failed to Deliver Stockholder Value Qualcomm’s Standalone Plan Rehashes 2015’s Broken Promises and is Not Credible NXP Will Not Solve Qualcomm’s Problems Qualcomm Stockholde
Slide 4: I. Broadcom's Offer Provides Significantly More Value to Qualcomm Stockholders
I. Broadcom’s Offer Provides Significantly More Value to Qualcomm Stockholders Than Any Other Alternative
Slide 5: Broadcom's Highly Compelling Best and Final Proposal
Broadcom’s Highly Compelling Best and Final Proposal Value $82 per Qualcomm share $60 in cash and remainder in Broadcom shares 56% premium to Qualcomm 30-day VWAP(1) 50% premium to Qualcomm unaffected price(2) Regulatory Certainty Significant regulatory reverse termination fee Regulatory efforts pro
Slide 6: Broadcom's Highly Attractive Proposal Delivers Certainty of Value with Equity Upside
Broadcom’s Highly Attractive Proposal Delivers Certainty of Value with Equity Upside Potential for Qualcomm Stockholders Broadcom’s Proposal Offers a Significant Premium… $52.71 30-Day VWAP Qualcomm Share Price Performance Qualcomm has only traded above $82 per share for 3 days over its 26+ year his
Slide 7: Broadcom's Substantial Premium Offers Top-Performing Equity Returns
Broadcom’s Substantial Premium Offers Qualcomm Stockholders Top-Performing Equity Returns …Which Puts Broadcom’s Proposal in Elite Territory + 56% premium to Qualcomm’s 30-day VWAP would rank in the top decile 56% Premiums Paid in M&A Transactions Since 2001 Source: Thomson One Note:Announced transa
Slide 8: Broadcom's Offer Ascribes a Premium Multiple to Qualcomm
Broadcom’s Offer Ascribes a Premium Multiple to Qualcomm Qualcomm Historical NTM P / E Multiple(1) Qualcomm Historical NTM EBITDA Multiple(1) 1) Market data as of 11/2/2017, Qualcomm’s last unaffected date; based on consensus estimates, not pro forma for NXP acquisition NTM EBITDA Offer Multiple NTM
Slide 9: Proposal Provides Substantial Upside Potential and Downside Protection
Cash component crystallizes $60 in value – on its own a premium to Qualcomm’s unaffected share price Stock component affords participation in combined company’s significant upside potential Broadcom has an unmatched track record of execution and price appreciation following M&A transactions Proposal
Slide 10: Broadcom's Track Record of Successfully Integrating Large M&A
Long-Term Operating Margin Target: 45% L-T OM Tgt: 47.5% Long-Term Operating Margin Target: 30% Long-Term Operating Margin Target: 40% Broadcom Management’s Track Record of Successfully Integrating Large, Complex M&A Significantly De-Risks Equity Component of Offer for Qualcomm Stockholders Broadcom
Slide 11: Post-Announcement Value Creation
…And Post-Announcement Value Creation / / / Broadcom Has a Proven Track Record of Considerable Share Price Appreciation Following Acquisitions Broadcom Returns Following Transaction Announcement / Rumor(1) S&P 500 S&P 500 S&P 500 1) Broadcom returns from day prior to announcement or rumor (12/13/201
Slide 12: Broadcom Successfully Closes Transactions in a Timely Manner
$5.9B Months to Antitrust Approval 10 Months to Close 12 Broadcom Successfully Closes Transactions in a Timely Manner $6.6B Months to Antitrust Approval 4 Months to Close 5 $36.1B Months to Antitrust Approval 6 Months to Close 8
Slide 13: II. Qualcomm Has Repeatedly Failed to Deliver Stockholder Value
II. Qualcomm Has Repeatedly Failed to Deliver Stockholder Value
Slide 14: Qualcomm's Performance is in the Bottom Decile of the S&P 500
Note:Market data as of 11/2/2017, Qualcomm’s last unaffected date Qualcomm’s Performance is in the Bottom Decile of the S&P 500 Qualcomm’s Stock Price Has Significantly Underperformed Return 8% 664% Rank 433 7 Percentile 9% 99% 5-Year Return of S&P 500 Constituents
Slide 15: Qualcomm Failed to Turn 4G Leadership Into Stockholder Value
“We are ramping investments necessary to extend our leadership position in 5G as operators and customers seek to accelerate their launch date…. The modem technology and complexity is increasing, and we believe we can continue to outperform our competitors with our level of 5G innovation. It is clear
Slide 16: Qualcomm's Poor Execution Has Resulted in Significant Revenue Declines
(2) Qualcomm’s Poor Execution Has Resulted in Significant Revenue Declines During a Period of Strong Industry Growth Qualcomm is in Decline FY2014 – FY2017 Revenue Growth CAGR Unrealistic Long-Term Revenue Growth Target (1) 2018 Plan REALITY DISCONNECT MASSIVE UNDERPERFORMANCE (1) Per Gartner QCT an
Slide 17: Qualcomm is Overstating its 5G Growth Opportunities
Qualcomm is Overstating its 5G Growth Opportunities Qualcomm’s 4G Growth Benefitted From a Unique Set of Tailwinds 39% 67% ~15 providers ~5 providers Fewer baseband / app processor providers make share increases more difficult Smartphone market has matured Unclear which 5G “killer app” or device wil
Slide 18: Qualcomm's Business Model Has Been Broken for a Long Time
Qualcomm’s Business Model Has Been Broken for a Long Time Unnamed Licensee Major licensing customers have halted payments ~$4B In fines in the last three years Governments view Qualcomm’s practices as anti-competitive REGULATORY ISSUES AND FINES BUSINESS CONFLICTS 2006 2014 2015 2016 2017 2012 2009
Slide 19: Qualcomm's Broken Business Model Impacts Results
Qualcomm’s Broken Business Model Impacts Results Qualcomm’s Projected 6-8% Revenue Growth Rate is Unrealistic Given These Trends ? Qualcomm Mobile Phone Application Specific Revenue is in Decline(1) Downward Pressure on Implied QTL Royalty Rate(2) ($ in billions) Qualcomm no longer discloses royalty
Slide 20: Qualcomm Failed to Create Positive Operating Leverage
Despite Rapid Revenue Growth During the 4G Transition, Qualcomm Failed to Create Positive Operating Leverage in its Business Qualcomm’s Margins Have Declined Even When Revenue Has Grown… $11.0 Revenue EBT Margin Revenue and EBT Margin ($ in billions) 2010 à 2017 EBT Margin Decline: 1,399 bps Note:No
Slide 21: Qualcomm Has Significantly Underperformed its Peers
Qualcomm’s Inability to Manage its Cost Structure Caused Profitability to Decline Precipitously …And Qualcomm Has Significantly Underperformed its Peers CAGR FY2014 – FY2017 PEERS Revenue 6% 7% Gross Profit 5% 10% EBT 10% 17% Net Income 11% 18% Note:EBT margin as reported; non-GAAP financials presen
Slide 22: $21B in Repurchases Mask a 32% Decline in Underlying EPS
$21B in Repurchases Since FY2014 Mask a 32% Decline In Underlying EPS Share Repurchases Have Masked a Dramatic Earnings Decline $5.27 $4.66 $4.44 $4.28 18% of EPS driven from buybacks Note:Non-GAAP financials presented; diluted EPS and shares presented ? Qualcomm EPS is Being Inflated by Stock Buyba
Slide 23: III. Qualcomm's Standalone Plan Rehashes 2015's Broken Promises
III. Qualcomm’s Standalone Plan Rehashes 2015’s Broken Promises and is Not Credible
Slide 24: Qualcomm's Broken Promises
SOX S&P 500 Qualcomm’s Broken Promises #2 QCT Growth #3 Cost Reductions #4 Operating Margins #5 Profitable Growth #1 Create Sustainable Value For Stockholders 2015 PLAN 2018 PLAN “We are poised to excel in an even larger market set of opportunities and to deliver tremendous value to Qualcomm stockho
Slide 25: Qualcomm's Broken Promises: QCT Growth
“…we are investing in adjacent opportunities that are already delivering significant revenue for QCT today, and which will — which we expect to drive meaningful growth for QCT in the coming years” “Our ability to grow the business at 6%-8% annually over time is underpinned by growth from the expansi
Slide 26: Qualcomm's Broken Promises: Cost Reductions
Qualcomm’s Broken Promises “Our estimate also reflects the benefits of a new $1 billion cost reduction program we will be implementing immediately as we move to align our cost structure toward our long term margin targets” ($ in billions) “…we are taking actions to substantially reduce costs, taking
Slide 27: Qualcomm's Broken Promises: Operating Margins
Note:Non-GAAP financials presented Qualcomm’s Broken Promises “We are continuing to target a QCT operating margin of at least 20%” “We continue to target longer term QTL margins in the range of 86% to 88%” #2 QCT Growth #4 Operating Margins #5 Profitable Growth #1 Create Sustainable Value For Stockh
Slide 28: Qualcomm's Broken Promises: Profitable Growth
Qualcomm’s Broken Promises FY2015 FY2016 FY2017 Unrealistic 2018 Plan Revenue Growth (5%) (7%) (1%) 6% – 8% Operating Margin 34% 33% 31% 40% EPS Growth (12%) (5%) (4%) 12% – 16% (2x rev growth) #2 QCT Growth #4 Operating Margins #1 Create Sustainable Value For Stockholders #3 Cost Reductions #5 Prof
Slide 29: Qualcomm's FY2019 Projections Are Not Credible
Revenue Growth 6 - 8% 3-4x semi industry estimates EPS Growth 2x Only grown EPS faster than revenue three times in 10 years Cost Reductions Unable to achieve previous commitments Licensing Resolutions Plan assumes more revenue recaptured than lost ? Qualcomm’s FY2019 Projections Are Not Credible… $6
Slide 30: Unrealistic Dispute Resolution Assumptions
…And Have Unrealistic Dispute Resolution Assumptions Midpoint of Qualcomm’s FY2019 EPS target assumes restoration of $3.25B in lost revenue from its licensing program, levels higher than when the disputes first arose (1) (1) Annualized QTL Revenue $3.1B of Estimated Lost QTL Revenue ($ in billions)
Slide 31: IV. NXP Will Not Solve Qualcomm's Problems
IV. NXP Will Not Solve Qualcomm’s Problems
Slide 32: NXP Has Failed to Keep Pace With Industry Growth
NXP Has Failed to Keep Pace With Industry Growth and Severely Lagged its Peers in 2017 448 bps Q1 – Q3 2017 Y/Y Average Revenue Growth(1) Note:Data represents average of the first three quarters of CY2017 Y/Y revenue growth rates ADI revenue pro forma for the LLTC acquisition, CAVM revenue pro forma
Slide 33: NXP is Already Missing its Own Projections
NXP is Already Missing its Own Projections Source:“Updated Management Projections” as disclosed in NXP Schedule 14D-9 dated 11/18/16 Note:Non-GAAP financials presented “Updated Management Projections” for CY 2017 Q1 – Q3 2017 Actual Results Difference Revenue Growth (236 bps) Gross Margin (180 bps)
Slide 34: NXP is a Savvy Seller
NXP is a Savvy Seller ANNOUNCED BUYER DEAL VALUE TRANSACTION OBSERVATIONS April 2008 $1.6 Billion Sale of 80% of Cellular Baseband business Contributed to a Joint Venture with Ericsson in 2009 Subsequently dissolved in 2013 December 2010 $855 Million Sale of Sound Solutions business In 2015, the spe
Slide 35: V. Qualcomm Stockholders Deserve Directors Who Will Seriously Consider Broadcom's Proposal
V. Qualcomm Stockholders Deserve Directors Who Will Seriously Consider Broadcom’s Value-Maximizing Proposal
Slide 36: Qualcomm Board Has No Excuse For its Lack of Engagement
Qualcomm Board Has No Excuse For its Lack of Engagement With Broadcom on its Value-Maximizing Proposal Qualcomm Has Massively Underperformed the S&P 500 During the Tenure of Each Independent Director Date Joined Underperformance to S&P Since Joining Barbara Alexander 7/31/2006 (47%) Thomas Horton 12
Slide 37: Broadcom's Nominees Are Independent and Highly Qualified
Broadcom Nominees Qualcomm Board Average Years of Experience Serving on Public Company Boards 12 10 Semiconductor Experience Selected Other Experience Broadcom’s Nominees Are Independent and Highly Qualified Qualcomm’s Current Board Has No Directors With Prior Semiconductor Experience Outside of Qua
Slide 38: Broadcom's Nominees Are Independent and Highly Qualified
Broadcom’s Nominees Are Independent and Highly Qualified Nominee Experience Independent CEO / CFO Experience Technology Depth / Experience M&A / Finance Experience Public Company Board Samih Elhage Former President of Nokia Mobile Networks, CFO & COO of Nokia Siemens Networks and Nokia Networks Form
Slide 39: How Should You Vote?
Vote for independent nominees who are committed to maximizing value for all Qualcomm stockholders Vote for engagement to give Qualcomm stockholders the opportunity to obtain significant benefits of Broadcom’s value-maximizing proposal Vote for existing directors who have refused to engage with Broad
Slide 40: Broadcom
a BROADCOM erything «