Qualcomm Decides Against Breakup by Maintaining Current Business Structure
Qualcomm Inc has decided that it wouldn’t separate its designs and patent licensing. Despite pressure from an active investor, the company determined not to divide into separate chip making and technology licensing businesses. Hedge fund Jana Partners conducted a 6 month strategic review as well to identify whether the structure delivers more benefits or not.
Qualcomm, San Diego based company, a biggest chip maker (chips used in mobiles), has two major business units, one sells patent licensing and other sells chip. The company stated on Tuesday, that its current structure offers exclusive advantages that cannot be replaced.
Qualcomm’s earnings boosted by over 40 percent in the last three quarters of the year. The company said that it had a focused plan which is believed would enhance profits and help in emerging. Current structure permits Qualcomm to make strong relationships with emerging Chinese customers.
Qualcomm’s chairman Paul Jacobs, said “the review options consisted of partial or full separation of the licensing or chip business. But the board of directors concluded that the current structure works best”. “We looked at everything it was a very rigorous process” said by Steve Mollenkopf, Qualcomm’s CEO.
The company also revealed that it has experienced stronger chip shipments and pricing than previously expected in the fiscal first quarter ending this month. Now the company expects to report its earnings of the prior forecast.
Before refusing offers of an investor the company promised to take a new look at the plan. The promised was followed very well and company came up with better results. The company exposed news that its shares rose about 4% to $48.77 in midday trading. The reason behind breakup is clear that why company refused to enter into new business structure.