It’s still early days, but Qualcomm’s CEO Paul Jacobs said during the company’s third-quarter conference call today it has begun discussions with other companies regarding alternatives for its costly FLO TV business. “It will get done in the next year but I don’t think I can be much more specific than that,” Jacobs said. “A lot of interesting discussions.”
AP reports that the company is considering “a number of alternatives” for its unprofitable mobile TV business.
Building a broadcast mobile TV business has been more difficult for the company than originally anticipated and not trivial considering the millions invested. First, it had to buy a swath of spectrum nationwide; then it had to build out a network of transmission towers; and finally it had to get the corresponding chipset into a variety of consumer devices. While the infrastructure is mostly in place today in the U.S., distribution among carriers and building a brand has been the big challenge.
Qualcomm’s FLO TV business makes up a majority of its Qualcomm (NSDQ: QCOM) Strategic Initiatives group, which in the third quarter, reported $118 million in operating expenses (primarily related to FLO TV), it said.
Qualcomm has a number of options for the unit: It may sell off the network and the spectrum, and fill a more familiar role as a chipset provider to that new company. (Qualcomm’s chipsets are based on proprietary technology and competes against open standards). Potential acquires could include services that are already being provide in cars, such as satellite radio, and are looking at expanding into TV and other data services. There’s also a chance that the buyer would shut down the mobile TV business and use the spectrum for other purposes, like wireless broadband. Spectrum is both valuable and scarce, making this an easier sell than one might expect.
Overall, the company did better than it had expected in the third quarter based on strong smartphone sales and raised its guidance. Revenues fell 2 percent year-over-year, but Qualcomm saw net income jump 4 percent.