The prominent hedge fund named Jana Partners’ efforts has started bringing results. According to reports, Jana Partner has been fighting hard to ensure that QUALCOMM, Inc. (NASDAQ:QCOM) breaks up into smaller entities that are easy to take over. The information was first disclosed by Wall Street Journal couple of days ago. It’s latest of a series of wars by activist investors on aging information technology firms.
Insights On The Matter:
The performance of Qualcomm hasn’t been up to the mark in the last one year. Overall, the company’s stock went down by 11% over the last 12 months. Even though it generated around $18 billion in cash flow and over $2.4 billion as the cash from operating activities in 4Q2014, but still it couldn’t win the trust of investors. Jana Partner owns Qualcomm shares worth more than $2 billion.
It strongly believes that the chip-maker should take a brave decision by spinning off its semiconductor unit from licensing business. It will not only help the company to focus back on the licensing business, but also make things easy to run in the future. It’s the high time for Qualcomm to execute cost cutting, buy back shares and follow the shareholder playbook.
It’s not about QUALCOMM, Inc. (NASDAQ:QCOM) alone, but many other tech companies who have been in business for decades. Some of the other companies that have had the similar experience over the last few months include names like Intel, Oracle, Cisco, e-Bay and Hewlett-Packard. Intel grew at a good pace in 2014, but the year 2015 has been telling a different story so far. So far, the company has gone down by 12%, and things don’t look good for the rest of the year.
Activist Investors are those who buy shares of any company for making profits, but also force it for making changes like share buybacks, spin-offs, and higher dividends. They had never been as active as they have become now. It will be good to see as how Qualcomm fights this situation.