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Jana, one of Qualcomm's largest shareholders, is
also calling on the company to cut costs, accelerate stock
buybacks and make changes to its executive pay structure,
financial reporting and board of directors, the newspaper said.
(http://on.wsj.com/1EsowPH)
Qualcomm said last month it would buy back up to $15 billion of
shares and raise its quarterly dividend. The company also said
it would continue to return at least 75 percent of its free cash
flow to shareholders annually.
In the letter, Jana said the buyback is a positive step but
Qualcomm needs to do more to capitalize on its strong position
in the chip market. It said Qualcomm's chip business is
essentially worthless at the company's present market value, the
Journal reported.
While the majority of Qualcomm's revenue comes from selling
so-called baseband chips that enable phones to communicate with
carrier networks, most of its profit comes from licensing
patents for its widespread CDMA cellphone technology.
Earlier this year, Qualcomm's longtime customer Samsung
Electronics Co opted to use an internally developed processor
for its new Galaxy S6 smartphone rather than Qualcomm's latest
Snapdragon mobile chip.
Jana executives and Qualcomm's management have held private
discussions since late last year, the Journal said, citing a
person familiar with the conversations. In the letter, Jana
described the talks as constructive.
Reuters could not immediately reach Jana Partners and Qualcomm
for comment outside regular U.S. business hours.
Shares of Qualcomm, which has a market capitalization of $114.08
billion, have fallen about 7 percent since the beginning of this
year.
(Reporting by Supriya Kurane in Bengaluru; Editing by Gopakumar
Warrier and Anupama Dwivedi)
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