NEW YORK (TheStreet) -- Qualcomm (QCOM) is under pressure from activist hedge fund Jana Partners to shake up the company's cost structure and return capital faster to shareholders, in an effort to boost its share price.
With an investment of more than $2 billion in the San Diego-based Qualcomm, Jana Partners has outlined several strategies to boost the lagging share price, including accelerating its $15 billion buyback program, cutting costs, aligning executive compensation in line with the share price, and strengthening the company's corporate governance, to name a few.
Shares of Qualcomm were falling in late Monday trade, losing 0.39% to $68.78 after having traded as high as $71.90, following the initial report from The Wall Street Journal.TheStreet has received the letter from sources close to the situation.
Here's the letter in its entirety.
Qualcomm Inc. (QCOM) - We have invested over $2 billion in Qualcomm Inc., making us one of the company's largest shareholders. Given the size of this commitment, we wanted to share in some detail our rationale and enthusiasm for the investment.
Qualcomm's wireless IP licensing (~65% of EBT) and chipset businesses (~35% of EBT) have market leading positions backed by extensive IP and engineering talent and are beneficiaries of several secular growth drivers in the wireless market. Despite these excellent businesses, Qualcomm trades at a depressed absolute and relative valuation with a fiscal year end 9/16 P/E multiple of only ~9x after backing out more than $30 billion in net cash.2 Following a long period of share price underperformance,3 the company is out of favor with investors and analysts whose focus on short-term data points leads them to ignore Qualcomm's significant improvement potential, its strategic importance, and the underlying earnings power afforded by the strength and positive long-term secular drivers of its businesses.