Qualcomm (NASDAQ:QCOM) said it will remain a single business, finally putting to rest speculation that it would split its chipset and licensing businesses.
The San Diego-based firm ended a five-month strategic review aimed at addressing concerns including decreasing profits, a decline in its share price and investigations by antitrust regulators in multiple markets around the world. The review was sparked by an activist investor who urged the company to consider splitting in two to boost value for shareholders, among other things.
"The strategic benefits and synergies of our model are not replicable through alternative structures," Qualcomm CEO Steve Mollenkopf said in a prepared statement announcing the decision. "We therefore believe the current structure is the best way to execute on our strategy to build on our position in the ecosystem and deliver enhanced performance and returns."
Shares of the company rose 2.6 percent following the announcement.
Qualcomm said in July it would consider splitting in two as part of a deal with Jana Partners, which had invested $2 billion in the company and in a letter to fellow investors demanded Qualcomm make major changes. As part of a deal with Jana, Qualcomm also agreed to cut $1.4 billion in costs, slash up to 15 percent of its workforce and change some of its corporate practices.
Qualcomm slashed more than 1,300 jobs at its San Diego headquarters in September as part of a restructuring plan.
The company posted quarterly earnings in November that beat analysts' expectations, although sales and profit fell sharply from the year-prior period. But Qualcomm issued expectations for the current quarter that fell below analysts' forecasts due to its struggles to negotiate new patent licensing deals with Chinese handset manufacturers. However, that situation too may be easing: Earlier this month Qualcomm and Xiaomi inking a wide-ranging patent licensing deal.
But troubles on the regulatory front continue to plague the company as well. South Korean antitrust authorities in November accused Qualcomm of violating licensing laws in that market, and the European Commission filed antitrust charges last week claiming the company illegally paid a customer to use its chipsets exclusively and that it sold chipsets below cost in an effort to force a competitor out of the market.
- see this Qualcomm press release
European Commission charges Qualcomm with antitrust violations
Qualcomm faces possible fine from South Korean antitrust authorities over licensing practices
Qualcomm to review whether to split up chipset and licensing units, will slash up to 15% of workforce