Published in PC Hardware

Qualcomm chip business worthless

by on13 April 2015

Spin it off warns sctivist investor

Qualcomm has been told to spin-off its "worthless" chip unit away from its patent-licensing business in order to boost sliding stock prices.

According to the Wall Street Journal Jana Partners is calling on Qualcomm to cut costs, accelerate stock buybacks and make changes to its executive pay structure.

Qualcomm has already said it would buy back up to $15 billion in shares and raise its quarterly dividend to 48 cents per share from 42 cents.
But Jana is one of Qualcomm's largest shareholders, having purchased a stake in the chip maker worth over $2 billion.

It said that the buyback program is a "positive step," but Qualcomm should do more to capitalize on its dominant position in the chip market. At the moment Jana thinks that Qualcomm's chip business "is essentially worthless" at the firm's present market value.

This is a bit strange as Qualcomm is one of the world's largest makers of chipsets used in mobile devices. The firm also supplements its income through patent-licensing deals.

Samsung, a long-standing customer of Qualcomm, dropped the company's chips from its latest Galaxy S6 flagship smartphone earlier this year and instead opted for an internally developed processor.

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