Qualcomm ditches plans for business split

Business as usual at chipmaker following six-month strategic review

Tags: QUALCOMM Incorporated
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Qualcomm ditches plans for business split Qualcomm said that its current structure allowed for strategic benefits
By  Tom Paye Published  December 16, 2015

It's business as usual at Qualcomm, which announced yesterday that it would continue operating under its current structure following a six-month review into the possibility of splitting.

The review, brought about by one of the chipmaker's largest shareholders, Jana Partners, looked into whether splitting Qualcomm's chipmaking and licensing businesses would yield better returns and strategic benefits. However, the strategic review concluded that the company would be better off as a single entity.

Qualcomm said that its current structure allowed for strategic benefits that could not be replicated under two different businesses. The company added that this structure allows it to leverage benefits from Chinese customers, which are expanding into other markets.

Qualcomm is the world's biggest manufacturer of mobile computer chips. However, the company's earnings have led to problems with investors unsure of the board's strategy. According to Reuters, earnings have slumped by more than 40% in each of the last three quarters. Share prices have gone in the same direction, and have fallen by around 40% this year.

The bulk of Qualcomm's earnings comes from royalties paid out from other vendors using its technologies. However, the chip manufacturing business is gaining ground as more vendors outsource their chipmaking activities to third parties.

Even so, both sides of the business have been struggling, and the company's board has a lot of ground to make up. CEO Steve Mollenkopf said that the company had a "focused plan" to drive growth, but did not elaborate on what the plan was.

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