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Qualcomm May Consider Separating Its Businesses

July 21, 2015 - Written By Justin Diaz

Qualcomm has been having a rough timer lately due to complaints about overheating issues with their latest high end mobile chip, the Snapdragon 810, as well as the increased competition from rivals like MediaTek and other chip makers. These details have likely been part of what’s led Qualcomm to reportedly let go of thousands of employees which is suggested to be happening sometime this week during the company’s earnings call which takes place Wednesday. Should the employee cuts actually happen, it would be the second time within a year where Qualcomm had let go of employees likely to help cut costs and restructure parts off their business or operations, as they let go of a small number of employees last year in December. This of course, would be on a more massive scale and ten times as many jobs would be lost.

The latest details suggest that Qualcomm may also be considering breaking up its company which is comprised of its chip making business and its licensing business, in light of the increased pressure and criticism from shareholders that Qualcomm’s reluctance to break away the licensing business is hurting shareholders in the long run. Jana Partners which is one of Qualcomm’s investors and has snagged up $2 billion in shares as of last year has urged Qualcomm to break away its patent licensing business so that it might generate more shares and value for the investments in the company.

It’s still unconfirmed whether or not Qualcomm will end up breaking away and separating the two parts of the company, but according to the unnamed sources they’ll be implementing a strategic review which could lead to such a decision, also likely to happen at tomorrow’s earnings call alongside the rumored job cuts. Investors like Jana have been openly outspoken though about what it wants from Qualcomm and have made themselves clear about how the licensing business is seen as a more profitable asset of Qualcomm’s. In addition to the pressure from investors, Qualcomm is also potentially facing critical analysis from the EU over its business practices which only adds to the difficulties for the current leader in mobile chip processing.