Qualcomm Kills Chip, Software Spinoff Plans
Qualcomm Inc. on Tuesday scrapped plans to spin off its wireless chip and systems software business and said it will restructure the company into two units.
Qualcomm also said Richard Sulpizio quit as the company’s president and chief operating officer.
The San Diego-based firm, which makes chips and licenses patents used by an estimated 90 million mobile phone users, said the spinoff now is unnecessary.
The company said recent licensing agreements with 40 companies including Nokia, Fujitsu and NEC have reduced exposure to patent litigation, the main reason behind the spinoff. Company spokesman Richard Tinkler added that the soft initial public offering market also was a reason.
Qualcomm is a leader in chips and patents for the digital wireless technology known as code-division multiple-access technology, or CDMA. A competing technology called global system for mobile communications, or GSM, is used widely in Europe.
The spinoff was designed to put distance between Qualcomm and the chip and software business so the unit could have easier access to patented chip technologies developed by others. Chip companies are increasingly having to incorporate multiple technologies into their products because of the hodgepodge of wireless networks.
Qualcomm aims to develop GSM chips using patents held by others, but that carries the risk of litigation. But Qualcomm said new or extended licensing deals have eased that risk, allowing it to supply chips and software that support more than one technology.
Before the delays, Qualcomm had planned to first publicly spin off 10% of the wireless chip technology, then distribute the rest of the shares to stockholders by next month.
As for the resignation of Sulpizio, the company said little other than he left “to pursue personal interests.”
But Qualcomm had said Sulpizio would run the new chip company once it was spun off. Some analysts speculated that Sulpizio chose to leave because he wants to seek a chief-executive-level job elsewhere. Sulpizio did not return calls seeking comment.
Qualcomm Chief Financial Officer Anthony S. Thornley was given the additional title of chief operating officer.
Qualcomm said it is reorganizing into two groups, one for its wireless and Internet business to be headed by Paul E. Jacobs and the other a CDMA Technologies group to be run by Donald E. Schrock.
Qualcomm’s stock soared during the late 1990s amid the wireless explosion. The company became one of San Diego’s most successful companies, with its name adorning the former Jack Murphy Stadium in San Diego, where baseball’s Padres and football’s Chargers play.
But like other technology stocks, Qualcomm’s shares have been hammered in the last year. Qualcomm closed Tuesday at $57.75 a share, down $3.10 and well off its 52-week high of $104.44.
