Jana Partners' Barry Rosenstein: We Are Not Definitely Saying That QUALCOMM Should Split-Up

The Wall Street Journal reported on Monday that hedge fund Jana Partners LLC in its quarterly letter to its investors disclosed that it is asking QUALCOMM, Inc.QCOM to spin-off its chip unit from its patent-licensing business. The hedge fund also wants Qualcomm to cut costs and accelerate its share buyback program.

Barry Rosenstein, founder of Jana Partners, was on CNBC Monday to discuss the changes he is asking Qualcomm to make.

Tremendous Potential And Value

Garden was asked why he has gone activist on Qualcomm. He replied, “Well we have made our biggest commitment to a company that we think has tremendous potential and tremendous value. I mean this is an opportunity to invest in a market leader, high-quality company, dominant company in its space and fast growing cell phone, mobile, smartphone space and it’s trading at a big discount to its value. Its 9 times […] earnings net of cash and they have got many, many avenues of value creation available to them.”

The Split Up

On splitting up the chip and patent-licensing business Garden said, “Just to be clear we have had very constructive discussions with this company, we have met with them multiple times. We are convinced that the board and the management recognize [their] issues, we are convinced that they are trying to do the right things and we are optimistic that they are going to.”

“We have advocated a number of steps, not just a split-up and in fact what we think they ought to do is just [do a] transparent review of the client businesses and determine whether [or not] it makes sense to do either a partial or a full split. So, we are not definitively saying that they should split it up,” Garden concluded.