Activists Want Qualcomm to Break Up

Carl Icahn had success getting eBay (EBAY) to part with PayPal. Now activist investors at Jana Partners want Qualcomm (QCOM) to break itself up:

Qualcomm Inc. is under pressure from activist investor Jana Partners LLC to consider a breakup and other options to boost the giant chip maker’s sagging stock price.

Jana is asking Qualcomm to consider spinning off its chip unit from its patent-licensing business, which accounts for most of the company’s profit, according to a quarterly letter to Jana investors reviewed by The Wall Street Journal. Qualcomm itself proposed the idea 15 years ago but later called it off.

Jana—which has purchased a stake of more than $2 billion, making it one of Qualcomm’s largest shareholders—also is calling on the company to cut costs, accelerate stock buybacks and make changes to its executive-pay structure, financial reporting and board of directors, according to the New York hedge fund’s letter, which was slated to be sent to Jana investors Monday.

I think that’s a good idea for QCOM and it would be in the best interest of shareholders, though I’ll note that Qualcomm has not been as resistant as others in regard to shareholders. Last month QCOM hiked their dividend by 14% and announced a massive share buyback.

Shares of QCOM have been up as much as 4% this morning but are now up about 1.7%. Earnings are due on April 22.

Posted by on April 13th, 2015 at 10:25 am


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