Barron’s has floated the idea that Qualcomm (QCOM) may want to break itself into two pieces. Almost all of its rivals and its largest customer, Nokia (NOK), are in legal battles with the chip company. And, it has lost key IP legal battles with Broadcom (BRCM) that limit sales of certain of its chips.
Barron’s writes that "in Qualcomm’s case, royalties account for nearly a third of the company’s roughly $9 billion in estimated revenues for calendar year 2007, while chipsets are expected to generate about $5.4 billion and data application technology is pegged to rack up about $800 million in sales."
And, it is licensing that has the IP issues. So, "rid the chipset business of its patent-licensing revenue exposure and divide the company in two, unlocking the value of the chipset business."
The problem with this kind of break-up is clear. Investors may get one strong stock with tremendous growth potential. But, they get one weak stock which, if IP problems are too great, could end up being worth almost nothing. If current stock holders end up selling the wrong one or keeping the wrong one, they may well be worse off than if the company stays together and fights though its problems.
Douglas A. McIntyre
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
