Qualcomm on Monday faced calls from an activist investor to consider breaking up the company in a bid to improve its share price.
Hedge fund Jana Partners –which owns a $2 billion stake in Qualcomm – is urging the company to spin off its mobile handset chip division from its patent-licensing business, according to an investor letter seen by The Wall Street Journal.
The same idea was put forward by Qualcomm itself in 2000 in a bid to protect the chip-making operations from the side of the business that navigates complex patent-licensing negotiations.
Jana Partners also called on Qualcomm to cut costs, accelerate stock buybacks and make changes to its executive pay structure, financial reporting and board of directors.
Unnamed sources cited in the report said Jana and Qualcomm have held private discussions since late 2014. According to the investor letter, the talks have been constructive.
"Qualcomm welcomes input from our investors and has a track record of active engagement with stockholders," said Qualcomm, in the Journal article. "The board and management team will continue to consider actions that are in the best interests of all stockholders."
Qualcomm’s shares have fallen around 12% in the last 12 months amid mounting competition and antitrust investigations in the U.S., Europe, South Korea, and China. Monday’s news caused a 3.5% jump in Qualcomm’s share price.
