Qualcomm shareholder pushes for company break-up

Qualcomm is under pressure from activist investor Jana Partners to consider a breakup and other options to boost the chip maker’s stock price. Jana is asking Qualcomm to consider separating 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 holds shares worth more than USD 2 billion in Qualcomm. The investor 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. A spokeswoman for Qualcomm said the company welcomes feedback from shareholders. Jana executives and Qualcomm’s management have held private discussions since late last year, one person familiar with the conversations told the paper. In the letter, Jana described the talks as constructive.

Qualcomm has taken steps recently to boost its stock price, including a USD 15 billion share buyback announced last month. In the letter, Jana said the buyback is a positive step but the company needs to do more to capitalize on its strong position in the chip market. The fund said Qualcomm’s chip business is essentially worthless at the company’s present market value.