QUALCOMM, Inc. (QCOM) Looking To Sell Vuforia Augmented Reality Technology Division

QUALCOMM, Inc. (NASDAQ:QCOM) is planning to sell its Vuforia augmented reality technology unit. The company is in the process of restructuring itself, and this is part of the process. In July, the chipmaker indicated that it would reduce costs by $1.4 billion by laying off 15% of its staff apart from scaling back on some of its more outlaying efforts.

Chopping List

During that time, QUALCOMM, Inc. (NASDAQ:QCOM) also refused to spot any of the projects on the chopping list. However, now it appears that Vuforia is among the ones that are waiting for the wings to be chopped by the chipmaker. The reports suggest that the company is also keen on different options for the augmented reality technology unit.

The company is hopeful of finding a home outside Qualcomm. The optimism is there because the chip maker did the similar thing with Gimbal, which was a location beacon technology and is now an independent entity. The reports were not clear as to how far the company is taking these issues in discussion since its spokesperson refused to comment on the plans for Vuforia. Incidentally, Vuforia appeared in some of the high-profile marketing campaigns. That included World Cup promotion of Soccer. The chipmaker also appears to be wavering since augmented reality is one of the technologies to take off.

Split Will Not Create Value

Separately, QUALCOMM, Inc. (NASDAQ:QCOM) President, Derek Aberle, said that split the company will not create value for its shareholders. Both the company and the President are under pressure from activist investors, Jana Partners. He said that the management, as well as, the board is not expecting a review to be completed before the end of the current year.

However, the chipmaker’s president concurred with Jana Partners that the stock is undervalued. The company’s stock suffered a 25% drop in the last one year period while the broader index, S&P 500, fell only 2.25%. He also viewed that investors demand for a split was based on some analysis besides the belief that two divisions can be valued more if they are independent. The two divisions are its highly profitable licensing and the other is chips unit.

Create Conflicts With Customers

QUALCOMM, Inc. (NASDAQ:QCOM) President, Aberle, admitted that having both licensing, as well as, chips divisions, has created conflicts at times with the customers. However, he was quick to add that the company managed it very well.

He said that investors should look into the underlying issues and see whether a separation would solve them. He advised caution while promoting the split and that it is not an easy task like a simple analysis. Aberle said that Jana Partners did not apply pressure to split the company but wanted the management to consider it as an option.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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