Published in PC Hardware

Qualcomm will not break up

by on16 December 2015

Does not want to be a patent troll when it grows up

Qualcomm has decided that it is not in its best interested to flog off its chipmaking business and stick to becoming a patent troll.

The idea was suggested by a lead shareholder, Jana, who noted that the company made “nothing” from its chips and had to spend a fortune on R&D to get what it had.

However after a six month investigation into the idea, Qualcomm Inc decided not to split into separate chipmaking and technology licensing businesses.

San Diego-based Qualcomm, the biggest maker of chips used in mobile phones, said its current structure offered unique strategic benefits that cannot be replicated.

Qualcomm, whose earnings have slumped by more than 40 percent in each of the last three quarters, said it had "a focused plan" in place that it believed would drive growth. Chief Executive Steve Mollenkopf did not elaborate.

The company has also said all along that its existing structure allowed it to leverage relationships with Chinese customers, which are expanding quickly into other countries.

Jana, which owned about 28.6 million Qualcomm shares is comfortable with Qualcomm's decision and supportive of the board's efforts apparently.

Qualcomm said business in the current quarter was stronger than expected as 3G and 4G device shipments were helping its licensing business and cost cuts were taking hold.
The chipmaker said it now expected earnings per share for the quarter to be at or modestly above the high end of its forecast range. The company had forecast earnings of 80-90 cents per share for the quarter.

The technology licensing business has driven Qualcomm's profits for years, thanks to the royalties it collects on the chip-technology developed by its chipmaking unit.
Qualcomm can continue to outsource hardware manufacturing without having to go through a split, he said.

Last modified on 16 December 2015
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