We haven’t enjoyed a major activist investor saga in our industry for a while now (possibly since Carl Icahn went after Jerry Yang’s Yahoo) but we might now see some major handbags as ‘activist investor’ Jana Partners is having a go at chip giant, Qualcomm, currently valued at around $114 billion.

Qualcomm has recently been suffering from a non-performing stock price as the mobile chip market becomes ever-more competitive - Jana is one of Qualcomm’s largest shareholders. Jana is asking that Qualcomm consider spinning off its chip unit from its patent licensing business as it thinks that this would add value to the whole.

Not unexpectedly, Qualcomm doesn’t agree.

The California-based company has already been working to stave off shareholder unrest - last month it announced a $US15 billion share buy-back programme and has undertaken to return 75 per cent of  its cash flow to shareholders, but Jana, which owns 4.4 million Qualcomm shares following an investment of around $2 billion in the company, predictably says this isn’t enough.

It would like to see the buy-back programme accelerated and it would like to see more ‘out of box/comfort zone’ thinking by Qualcomm, up to and including strategic deals and partnerships.  It wants Qualcomm to do some serious restructuring to ‘leverage’ its position in the chip market.

While the chip business generates lots of revenue at present, that cash is not translating into profit. And there have been big chip setbacks: Samsung recently elected to use one of its own internally-developed processors for the soon to be best-selling Galaxy S6 instead of Qualcomm’s Snapdragon mobile-oriented processor. Meanwhile the patent business is profitable, in particular Qualcomm makes a lot of money from licensing its CDMA cellular technology.

Qualcomm says it welcomes input from its stockholders, including JANA Partners, but…  it maintains its “opportunities remain strong” and points out that it intends to take its mobile technology into new areas such as automotive, healthcare, networking, smart homes, smart cities, and wearables. It says that it’s already conducted fundamental reviews of its business model and has concluded that its inherent synergies will create more value for stockholders than could be created through alternative corporate structures - by breaking up in other words.  “We will continue to evaluate opportunities to enhance stockholder value and are committed to pursuing the right course of action for all of our stockholders,” said Qualcomm in a written statement.