Despite being the bigger money maker for Qualcomm, the licensing business has become a distraction for the company with all the ongoing litigations. No wonder investors would like a change for the better.
Issues with its licensing business has unwillingly invited the takeover bid by Broadcom. A company not quite as big as Qualcomm in terms of both assets and shareholders' equity, Broadcom nevertheless thinks it can do better than the current Qualcomm management.
Even if you don't like Broadcom just coming in and taking ownership of Qualcomm's dominant cellular technologies, you can't blame Broadcom for doing so when the Qualcomm management has mishandled the company's licensing business.
However, that can all change if Qualcomm understands the underlying problem and has the right solution to it. In short, Eliminating the vulnerability in its licensing business will insure Qualcomm's continued independence.
Here is how: separate the licensing business of administering licenses to licensees from chip-making and R&D. Potential considerations include outsourcing the licensing work to third-party legal entities or spinning off the licensing business to shareholders.
Either way, Qualcomm should stay out of any direct fights with problematic licensees to ensure favorable valuation of Qualcomm's remaining chip-making and R&D business. That'll make investors happy, and management in turn gets to retain its job.
By restructuring its licensing business, Qualcomm cuts off a main incentive for any other future takeover attempts. An independent Qualcomm holds better promises in developing future digital communication technologies.
