Qualcomm says to maintain current corporate structure
Qualcomm Inc (QCOM.O) has decided not to separate its chipmaking and technology licensing businesses, concluding a six-month strategic review instigated by hedge fund Jana Partners.San Diego-based Qualcomm, the biggest maker of chips used in mobile phones, said on Tuesday its current structure offered unique strategic benefits that cannot be replicated.Qualcomm, whose earnings have slumped by more than 40 percent in each of the last three quarters, said it expected earnings per share for the current quarter to be at or modestly above the high end of its previously forecast range.The company had previously forecast earnings of 80-90 cents per share for the quarter.Qualcomm's shares, which have lost almost 40 percent of their value this year, were up 2.3 percent in premarket trading.Qualcomm said it was seeing a stronger quarter than expected as 3G and 4G device shipments were helping its licensing business and the benefits of cost cuts were kicking in.
Qualcomm's technology business has thrived for years on the big royalties it collects on the chip-technology developed by its chipmaking unit."Looking ahead, we have a focused plan in place that we believe will drive growth and we are off to a good start implementing that plan," Chief Executive Steve Mollenkopf said in a statement. He did not elaborate on the plan.The special committee that carried out the strategic review included two members nominated by Jana, which unleashed a public campaign to reform Qualcomm in April.
Jana declined to comment on Tuesday.Qualcomm President Derek Aberle said in September that Jana did not pressure the company to break up but wanted a review to look at all options to unlock value.
The company has said in the past that its existing structure allowed it to leverage relationships with Chinese customers looking to expand into other countries.But Qualcomm itself has recently faced a host of problems in China and other key markets such as South Korea, including delays in closing new licensing agreements.Qualcomm shares were trading at $47.91 before the opening bell. (Reporting by Sayantani Ghosh and Devika Krishna Kumar in Bengaluru; Editing by Ted Kerr)