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Source: Barry Dodge. Used with permission under Creative Commons 2.0.

Mobile-chip giant Qualcomm (NASDAQ:QCOM) has been a long-term success story, but recently, its stock hasn't lived up to shareholders' expectations. Investors were expecting continued challenges in Wednesday's fiscal third-quarter financial report, and Qualcomm's results confirmed the declines in sales and earnings that have plagued the company recently. Yet more importantly, Qualcomm gave investors hope for drastic change, as it also released a strategic realignment plan that could include some of the concessions that activist investors have looked to implement. Let's take a closer look at Qualcomm's results and why its restructuring announcement stole the show.

How Qualcomm earnings fared
Qualcomm wasn't able to overcome the trends that have held back its sales and net income lately, but it still did better on its bottom line than some had feared. Revenue fell 14% to $5.83 billion, which was slightly worse than the $5.85 billion consensus among those following the stock. Net income of $1.18 billion was down 47% from the year-ago quarter, but adjusted earnings of $0.99 per share were $0.04 higher than what most investors had expected to see.

Looking more closely at Qualcomm's results shows some of the strengths and weaknesses of the company. MSM chip shipments were unchanged from last year's figure of 225 million, but total reported device sales climbed 4% to $60.4 billion, which is an important factor as it determines in part how much licensing revenue Qualcomm gets. Yet while device shipments in the 3G and 4G space rose by 15%, average selling prices for those devices fell 10%, limiting the amount of pure revenue gain Qualcomm could reap.

Moreover, Qualcomm's segment results showed some broad differences in performance. The QCT semiconductor business suffered some of the same pressure that the company's competitors have seen, with a 22% drop in revenue leading to a decline of nearly three-quarters in pre-tax income. Yet the QTL licensing business posted modest year-over-year gains of 7% in both sales and pre-tax income, helping to limit Qualcomm's overall losses.

CEO Steve Mollenkopf defended Qualcomm's results as having been within prior expectations and emphasized the company's plans to return billions of dollars of capital to shareholders through stock buybacks. Yet the biggest news was the decision to start a comprehensive review of Qualcomm's cost structure, with its strategic realignment plan intending to cut $1.4 billion in spending by the end of fiscal 2016. The plan includes reaffirming capital-return expectations, adding new members to the board of directors, aligning executive compensation with performance, and "reviewing alternatives to the Company's corporate and financial structure," which investors took to mean that Qualcomm would think about breaking itself into multiple pieces. Activist investor JANA Partners got two seats on the board and will get a third in the near future.

What's ahead for Qualcomm?
Qualcomm's vision for its new strategic realignment plan is aggressive but optimistic. In Mollenkopf's words, "Our Strategic Realignment Plan is designed to drive meaningful change in the near term -- without jeopardizing our ability to retain and build upon our technology leadership position and create long-term value for our stockholders." Support from JANA Partners should help ease some of the tension between the private equity company and Qualcomm as well.

Still, Qualcomm faces some significant challenges. The company cut its outlook for the semiconductor business for the current quarter, citing reduced market demand for devices that include its chips and moves from customers to cut back on premium-tier chipsets. Meanwhile, the technology licensing segment continues to suffer from violations of Qualcomm's licensing agreements, with the company saying that some of its Chinese customers continue to underreport sales of licensed products.

As a result of these and other factors, Qualcomm sees revenue falling 15% to 30% year over year in the fiscal fourth quarter, with a decline of 25% to 40% in adjusted earnings to $0.75 to $0.95 per share. Qualcomm also cut its full-year fiscal 2015 guidance even further, with expectations for sales of $24.5 billion to $25.5 billion and adjusted earnings of $4.50 to $4.70 per share.

Qualcomm investors weren't terribly enthusiastic about the news, sending the stock down more than 2% in the first 45 minutes of after-market trading following the announcement. The unanswered question is whether a strategic realignment really will help Qualcomm's fundamental performance. Long-term shareholders need to watch closely to ensure that future moves focus not just on producing quick gains but also on preserving and growing Qualcomm's business prospects. If it can achieve both of those goals, then Qualcomm investors could see big rewards from its strategic move.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Qualcomm. The Motley Fool owns shares of Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.