Qualcomm shares fall on news of FTC probe

Qualcomm (QCOM) shares dropped sharply Thursday following the tech firm's disclosure that a Federal Trade Commission investigation has multiplied the company's legal woes.

The major supplier of chips for mobile phones reported the FTC probe focuses on the company's licensing business, including potential breach of fair, reasonable and non-discriminatory terms. Companies commit to standard-setting regulators that they will license their patents on such equitable terms.

If a violation is confirmed, the FTC could impose a fine or order licensing practice modifications, Qualcomm said in the annual report filed after Tuesday's closing bell. The San Diego-based company said it was cooperating with FTC investigators, who notified the company about the probe on Sept. 17.

Shares of Qualcomm were down more than 11.3% at $68.43 in Thursday afternoon trading.

Qualcomm is also coping with the previously-disclosed investigation by China's National Development and Reform Commission of suspected monopoly practices. That probe, commenced in Nov. 2013, focuses on the companies licensing business and the manner in which royalties are calculated in Qualcomm's patent licenses.

Additionally, federal prosecutors in Los Angeles and the Securities and Exchange Commission are investigating Qualcomm over possible violations of the U.S. Foreign Corrupt Practices Act. Enacted in 1977, the anti-corruption statute makes it illegal for companies and their employees to make payments to foreign government officials with the goal of obtaining or retaining business.

Investigators in the SEC's Los Angeles office in March filed a notice indicating a preliminary determination to recommend a civil enforcement action against the company for FCPA violations, Qualcomm said. The company said it responded by filing submissions explaining why it believed there had been no wrongdoing.

"We are fully cooperating with these agencies and believe our practices comply with the laws of our countries, but given that these matters are in their early stages, it is difficult to predict what, if anything, will come of them," Qualcomm CEO Steve Mollenkopf said during a Wednesday conference call with financial analysts.