Published in PC Hardware

Qualcomm responds to spin-off proposal

by on14 April 2015

Thanks but no thanks

Qualcomm has issued a statement in response to an idea floated by Jana Partners a couple of days ago. 

Jana Partners, a major Qualcomm shareholder, boldly stated that the company’s chip unit is “worthless” and should be spun off into a new entity. Jana argues that Qualcomm’s patent licensing business wold do well on its own, thus boosting the stock price. 

Qualcomm responded by saying that the company’s opportunities remain strong, with long-term growth potential beyond the smartphone space:

“Our innovations have made smartphones the most pervasive technology of our time. They come to market through our inclusive licensing program and our cutting-edge chipsets and continue to play an integral role in the expansion of the mobile industry. We are now bringing the benefits of mobile technologies to new areas such as automotive, healthcare, networking, smart homes, smart cities, and wearables among others.”

The chipmaker went on to point out that its board of directors and management periodically review the corporate structure, but prior reviews have concluded that the current model creates more value for stockholders than an alternative corporate structure.

It is basically a polite way of telling Jana Partners that this would be a very bad idea in the long run. Qualcomm’s IP doesn’t fall from the sky, it’s the result of painstaking work and hundreds of millions of dollars’ worth of R&D. It’s made possible by strong chip sales, not the other way around.

Rate this item
(3 votes)

Read more about: