Qualcomm's board of directors convened under a heavy atmosphere.
Irving Jacobs spoke solemnly. "Cisco has given us an ultimatum to respond within three days! Furthermore, Qualcomm's situation is deteriorating due to rumors that AT&T is collaborating with other companies to block us!"
After Jacobs finished speaking, everyone glanced at one another, processing the implications.
"Just as we're dealing with a lawsuit for patent infringement, now AT&T is trying to stymie us too?"
"Yes, what should we do?"
Owen Jacobs scanned the group, then stood up. "I suggest we merge with Cisco without delay and collaborate on promoting our technology!"
"What terms will Cisco offer us?" one board member asked.
Jacob shook his head. "The details haven't been solidified yet, but they've assured us that Qualcomm will maintain operational independence post-merger, alongside executive compensation comparable to what Cisco offers."
"With our current predicament, merging with Cisco seems like our only choice. I'm in favor of this agreement!" declared one shareholder.
"I second that!"
"Let's do it!"
Owen Jacobs discerned that the majority leaned toward merging with Cisco. "All right, we will initiate formal negotiations with Cisco immediately!"
After the meeting, Jacobs promptly contacted John Chambers to inform him that Qualcomm was indeed willing to merge with Cisco, pending discussions about the terms.
Chambers took swift action, promptly organizing a negotiating team to meet with Qualcomm representatives the following day.
"Mr. Jacobs, here are the terms Cisco is proposing!" After Chambers and his team arrived at Qualcomm, they handed over printed documents for review. "Cisco will invest $100 million into Qualcomm, securing a 70% stake. Given Qualcomm's current circumstances, $100 million is far higher than its market value, but we're optimistic about your future advancements. So we're prepared to offer this generous valuation. If you're agreeable, we can sign the contracts right away!"
Jacobs and the other Qualcomm executives were taken aback by Cisco's offer. Promoting CDMA technology would warrant such a price. Yet given Qualcomm's evident struggles, it seemed Cisco had proactively undervalued them while extending an unexpectedly large sum.
Irving Jacobs exchanged glances with his colleagues but said nothing. Before the meeting, they had speculated that Cisco might offer around $50 million for a controlling stake. Thus, Chambers' $100 million valuation floored everyone!
"Mr. Chambers, we'd like some time to review this proposal before making a decision," Irving Jacobs said.
"Of course! Take your time. We'll wait outside for your feedback," Chambers replied. The Cisco team stood up and exited the meeting room.
Once they were gone, Owen Jacobs asked, "What are your thoughts on the terms?"
"I think it's a very competitive offer, but giving them 70% of our shares feels excessive!" another board member replied.
"I believe it's acceptable. With a $100 million investment, we could develop more advanced technologies. We could even design our own chips!"
Numerous discussions ensued around the table.
Ultimately, the allure of $100 million proved persuasive, tipping the votes in favor of accepting Cisco's offer.
Consequently, Owen Jacobs beckoned John Chambers and his colleagues back into the room. "Mr. Chambers, Qualcomm has decided to accept Cisco's terms!"
Chambers beamed with delight. "That's wonderful news! Let's proceed with signing the contracts!"
"Absolutely!"
Before long, Cisco and Qualcomm formalized their agreement.
The following day, Cisco CEO John Chambers announced to the public: "On February 27, 1990, Cisco and Qualcomm entered into a deal, with Cisco investing $100 million for a 70% stake in Qualcomm! Cisco MCI, a subsidiary of Cisco, intends to establish 1,008 signal towers throughout the United States to fully support CDMA technology!"
After the announcement, Cisco extended invitations to numerous world-renowned mobile phone manufacturers to partake in the upcoming Cisco Technology Licensing Conference, set to occur one month later!
For CDMA technology to gain status as the standard, support from mobile phone manufacturers would be critical; solid backing could facilitate its widespread adoption.
Following Qualcomm's acquisition, Henry breathed a sigh of relief. During his downtime, he picked up a newspaper and stumbled upon intriguing news!
"On February 20, 1990, Apple made an investment in ARM, the chip design division of the British Acorn Computer Company, to secure a chip supply for its Newton handheld computer!" Upon digesting this information, Henry facepalmed—the thought of using ARM had slipped his mind! As of now, Acorn Computer had not yet spun off ARM into an independent entity, but would do so in 1991. Investing in ARM would be prudent!
Acquiring ARM would align perfectly with Qualcomm's efforts to design CDMA chips!
Henry's excitement surged—this was golden opportunity! It felt as thrilling as watching a skilled performer dance enticingly before him!
"Time to reach out!"
Henry quickly called Qualcomm's CEO Owen Jacobs—now, he himself was the chairman. "Owen Jacobs, hello! This is Henry Williams!"
"Oh, Mr. Williams, hello!"
Henry stated earnestly, "Mr. Jacobs, I recommend that you pursue acquiring the chip design division under Acorn Computer Company in the UK. This acquisition would position Qualcomm well to design our own chips!"
"Oh, do you mean ARM? The processor chip created to streamline instruction sets?"
"Yes! ARM shows immense potential, as its simplified instruction set leads to high efficiency and low power consumption, making it ideal for mobile phones! If Qualcomm acquires ARM, it will be a game-changer!"
After Henry finished speaking, Jacobs contemplated for a moment before replying, "Mr. Williams, I'll arrange for someone to travel to the UK to negotiate the acquisition of ARM!"
"Perfect! If you're busy, I'll let you go!"
As Henry hung up, he considered that both Qualcomm and ARM had only their design teams with no chip manufacturing facilities. It seemed that investing to build their own fabs and production bases would be essential in the future! Furthermore, now that he had entered the semiconductor field, he could not let the opportunity to acquire other significant historical companies slip by—like AMD, Choate Semiconductor, and ATI, the display chip creator. There were countless others worth considering. Henry felt enthusiasm bubbling within him!
Ha! The heroes of the world should enter my domain!