Business, Hardware

Qualcomm to Sell Original Core Business?

According to our sources close to the heart of the company, there is a possibility that Qualcomm [NASDAQ:QCOM] will be selling their Qualcomm Enterprise Services business for an undisclosed amount of money. This business primarily deals with fleet management primarily pertaining to big rigs and other types of logistics management.

Qualcomm Enterprise Services is the child of their OmniTRACS business which was Qualcomm’s root business back in 1985. OmniTRACS is a satellite locating and messaging service primarily used by trucking companies. This business helped Qualcomm become a leader in CDMA technology. OmniTRACS allowed Qualcomm to test CDMA technology and eventually deploy it into phones.

Looking at Qualcomm’s overall businesses, Qualcomm Enterprise Services is included as part of QWI (Qualcomm’s Wireless and Internet division). This division is separate from Qualcomm Atheros, which is also one of Qualcomm’s wireless business units, but was a recent acquisition and has remained under the Qualcomm Atheros business unit name. As a share of revenue, QWI represented $656 million in revenue in 2011 with QES (Qualcomm Enterprise Services) representing $395 million of that. Taking that into consideration, Qualcomm Enterprise Services represents 2% of Qualcomm’s revenue. By comparison, QCT (Qualcomm CDMA Technologies), their chip business, represents 59% of Qualcomm’s revenue and showcases the shift that Qualcomm has making over the years away from OmniTRACS. Also, adding their licensing business into the equation includes 36% of the company’s revenue. QCT and QTL combined account for 95% of Qualcomm’s total revenue in 2011. Qualcomm was the world’s 6th biggest semiconductor manufacturer in 2011, and is likely to move up in rank going forward.

There is no doubt that getting rid of QES and selling off the division certainly makes sense. While there is likely some nostalgia involved in keeping QES as part of the company, it simply does not fit into the company’s future which primarily focuses on wireless technologies that ultimately end up serving consumers. This may be related to Irwin Jacobs’ (co-founder of Qualcomm) retirement from the board earlier this year and his son and current CEO, Paul Jacobs’ likely focus on core and emerging businesses. Some notable emerging businesses for Qualcomm are health and connected home as well as mobile payments. There are approximately 700 people in this division and if it were sold, it is likely that they would either be absorbed into the new company or be able to find jobs in another Qualcomm division.