Activist investor Jana Partners would like to see QUALCOMM, Inc. QCOM break off its chip unit from its larger patent-licensing business, according to a letter obtained by The Wall Street Journal. This could be a welcome idea as Qualcomm itself had previously floated the idea of a breakup 15 years ago.
At last price, the stock was 5.2 percent higher at $72.80 in pre-market trading.
In addition to a split, Jana said it would like Qualcomm to cut costs, accelerate stock buybacks and change its corporate governance, according to the report. Two-thirds of Qualcomm's profits come from patent royalties, while the other portion comes from its chip-making business. Qualcomm announced a $15 billion stock buyback last month - $10 billion of which will be repurchased in the next 12 months.
Jana would like to see management do more. The hedge fund said that it has been in discussions with Qualcomm, noting that those discussions were constructive.
Jana has a stake in Qualcomm worth more than $2 billion. Jana controls more than $11 billion in assets under management.
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