Qualcomm Pressured by Major Investor to Split Company
Activist shareholder Jana wants Qualcomm officials to separate their licensing and chip businesses in order to boost shareholder returns.Count chip maker Qualcomm among those tech companies under pressure from investors to split up their businesses. According to the Wall Street Journal, activist investor Jana Partners is pushing Qualcomm executives to separate its chip business from its patent-licensing unit, part of a larger effort to grow the company's stock price, change how executives are paid and return more money to its shareholders. Jana officials also want Qualcomm to cut costs and increase stock buybacks, among other measures, according to the report. The hedge fund is outlining its ideas in a letter to its own investors that is due to be sent out April 13. According to an unnamed source, officials with Qualcomm and Jana have had private meetings dating back to late last year, and in the letter to investors, Jana officials called the talks constructive. A Qualcomm spokesperson said that the chip maker "welcomes input from our investors and has a track record of active engagement with stockholders. The board and management team will continue to consider actions that are in the best interests of all stockholders." The push by Jana—which has bought more than $2 billion in Qualcomm stock, making it one of the chip maker's largest private investors—adds to what has been a difficult year so far for the company, which is the largest supplier for processors for the mobile device space. It was reported earlier this year that Samsung had decided not to use Qualcomm's new Snapdragon 810 premium mobile system-on-a-chip (SoC) in its Galaxy 6S smartphone, opting instead to use its own ARM-based Exynos chips. Samsung reportedly was concerned about overheating issues with the Qualcomm processor.
Qualcomm executives downplayed Samsung's move, noting that more than 60 other "premium-tier mobile devices" are using the Snapdragon 810, and in February released statements from such big-name vendors as Microsoft, LG Electronics and Xiaomi supporting the Snapdragon 810. Qualcomm's silicon is found in many top-tier devices, including Apple's iPhones.