Qualcomm Decides To Keep Current Corporate Structure; Raises Q1 EPS View

In a statement, Qualcomm said its board and management, with the help of independent advisors, completed the comprehensive review of its corporate and financial structure.

The committee decided that Qualcomm shareholders can be best served with the present structure, one unit, that runs both chipsets and the licensing business.

In Q3 FY2015, the company failed to meet Wall Street expectations by reporting a net income of $1.2 billion, or 73 cents per share, rather than expected earnings of 95 cents per share on a revenue of $5.85 billion.

Qualcomm, though, defended its existing structure on Tuesday, saying that it benefits twice from its in-house research and development operations, which create new technologies it can license as well as allowing it to improve the products it sells.

The company now expects to be at or modestly above the high end of the prior GAAP and Non-GAAP earnings per share guidance ranges for the fiscal first quarter.

“Given the dynamic industry and competitive environment, we made a decision to take a fresh look at our structure to ensure we were doing everything possible to enhance the value of the company and position ourselves for long-term success”, said Qualcomm chairman Paul Jacobs. “I’m happy about that”, Tigress Financial Partners analyst Ivan Feinseth said.

Some investors believed Qualcomm’s mobile semiconductor division in particular would be an attractive takeover target for rival chipmakers if the company split, boosting their return. ACQUISITIONS CONSIDERED Some analysts expressed surprise that Qualcomm did not come up with any value-boosting plans.

A recent sum-of-its-parts analysis by Merrill Lynch/Bank of America estimated that Qualcomm’s two divisions are worth $65 a share. Qualcomm, which has been facing a host of problems in China including delays in closing new licensing agreements, said on Tuesday it was making progress on closing the deals.