Visduh

Hedge fund wants Qualcomm to break up

Don, the catch phrase behind all these proposals is that adoption will "increase (or maximize) shareholder value." Recently there has been pressure on Pepsico to dismember itself into two companies, one a beverage company, and the other one a snack provider. I've watched too many of these spin-offs that were undertaken in the name of rationalization come to little or no good. This proposal reminds me of the spin-off of Agilent Technologies from Hewlett-Packard. That old instrumentation business was seen as a drag on H-P's newly hatched emphasis on computers and peripherals. In the intervening twenty years, Agilent has itself been playing a Monopoly game with smaller companies and firms and seems to be doing just fine. But what of H-P? Well, not so good at all, and its survival is in doubt. The big-time operators love to break up companies (for a fee) and to arrange mergers (for a fee.) Excuse my skepticism here, because if one part of Qualcomm is worthless, what is the point of cutting it loose? Will stock in it ever be worth anything? Shortly after Qualcomm went public, it spun off its wireless operation, Leap. And shortly afterward, Leap went belly-up. The pre-BK stock was worthless, even when Leap was reorganized. That spin-off did Qualcomm shareholders no good at all. There is a small positive in this proposal, the desire to "make changes in its executive pay structure." That should imply less going to the execs and more accruing to the stockholders. In this case, that would be a generally positive step.
— April 13, 2015 8:44 a.m.

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