QUALCOMM, Inc. (NASDAQ: QCOM – $51.89) the largest provider of processors and modem chips used in handsets, said earnings fell 44% in the fourth fiscal quarter, as struggles in its patent licensing business overshadowed positive signs in sales of smartphone chips. Revenue decreased 18% to $5.46 billion, but somewhat higher than estimates of $5.2 billion. Fourth-quarter profit came to $1.06 billion, down from $1.89 billion and, excluding charges for restructuring and other items, per-share earnings fell to $0.91 from $1.26, but five cents ahead of Street estimates. A significant restructuring is under way. The company plans to cut $1.4 billion in costs, $1.1 billion of which will come from office closings and a 15% headcount reduction. The remaining $300 million is expected to stem from reduced share-based compensation. This should put QUALCOMM in a better position to cope with changes in industry dynamics. A split of the more profitable licensing business from the chip design unit is still an option, amid pressure from activist investor Jana Partners, which recently secured two seats on QUALCOMM’s board. The biggest problem area is the chipset licensing business in China as the company continues to struggle getting Chinese smartphone makers to comply with a regulatory ruling laid out in February that set firm licensing rates in place. The company was recently able to reach an agreement with major smartphone player ZTE, but other firms have been less cooperative. The company seems confident that it will resolve this issue in the near term and said its strategic review should be complete by year-end. The company also projected lower profit than Wall Street expected in the current quarter, partly due to the licensing issues. The news was far from what investors were expecting and the shares are hovering around a 52-week low. The company also announced that it will no longer provide annual guidance; again not what analysts wanted to hear. Consensus estimates for both the first quarter and the full 2016 fiscal year have fallen since yesterday. As of now, the Street sees QUALCOMM posting $0.91, vs the previous $1.08 and full-year earnings per share of $4.27 vs. the former $4.65. For now, I am going to hold QCOM, but is indeed a stock to watch.