As part of its review, Qualcomm may also reshuffle its board and give Jana a say in adding independent directors, the report said.
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In spite of all of this, Qualcomm remains the world leader in application processors for smartphones and baseband chipsets.
The San Diego, California-based chipmaker has benefited greatly from the booming demand of mobile devices.
The newspaper said the company may announce it is considering the break-up and other options including returning more cash to shareholders along with its third-quarter results. MediaTek’s senior vice president, Jeffrey Ju, told me at the company’s Hsinchu, Taiwan headquarters that it expects its modems will be competitive with Qualcomm’s in a year. Profit over that span almost doubled from $4.3 billion to $8 billion.
That reality has not gone unnoticed by Jana.
Currently, the lion’s share of Qualcomm’s $26bn (£16.6bn) revenue is derived from its chip operation, while the licensing biz is the more profitable outfit.
Jim Lebenthal of Lebenthal Asset Management was on CNBC to discuss the reasons for owning Qualcomm’s stock and whether increasing dividends and spinning off its businesses will be beneficial for the company.
In April, Qualcomm rebuffed Jana’s attempts at a shakeup, saying that its “opportunities remain strong” and its executives have already considered a change in direction, but have decided against such moves. During a conference call in April to discuss the fiscal second-quarter numbers, CEO Steve Mollenkopf said the company’s reduced outlook was disappointing and that officials had begun a “comprehensive review of our cost structure”. “Prior reviews have concluded that the synergies provided by our business model create more value for stockholders than could be created through alternative corporate structures”.
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This may be quite a large hit on Qualcomm’s share price, but worthwhile in the long-term to keep the company from sinking into disrepair. The latest silicon from the chip maker giant is expected to be the Snapdragon 820 and might be able to help the profits get back on track but let’s wait for the quarter earnings to figure out the direction of the company.
