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Qualcomm plans 4,700 layoffs

Posted: 24 Jul 2015     Print Version  Bookmark and Share

Keywords:mobile  layoff  smartphone 

Qualcomm plans to lay off some 4,700 people, or 15 per cent of its employees as part of its restructuring plan. The mobile giant also revealed its quarterly result, which showed lower revenues that are still in line with expectations, as well as its plan to cut $1.4 billion in annual costs by 2016.

Revenues for Qualcomm's fiscal third quarter were $5.8 billion, down $1 billion year-over-year and $1.1 billion sequentially. Net profit was down a whopping 47 per cent from the prior year to $1.2 billion.

Amid an industry slowdown in smartphone growth, the company forecast its fourth quarter revenue would be down 15-30 per cent from the prior year to $4.7 to $5.7 billion. It estimated it will sell 170 to 190 million of its MSM cell phone chip sets in the period, down 19-28 per cent from last year.

The results amount to the first big downturn for the company that has been a darling of the go-go mobile era. Qualcomm attributed the decline to a decrease in licensing revenues, a burn off in inventory and reduced demand for premium chip sets from a vertical customer—likely Samsung—as well as lower than expected sales in China.

Despite dips in sales, the handset business remains an attractive market where increasing profitability is important, CEO Steve Mollenkopf said. Qualcomm expects the industry and its relationships in China to improve by the end of the year. It also anticipates the roll out of LTE with carrier aggregation in China.

The company sketched out the goals its restructuring plan in broad strokes:

  • Reduce annual costs from its fiscal 2015 levels of $7.3 billion.
  • Conduct a review of the company's corporate structure, capital return opportunities, and other potential strategic and financial alternatives.
  • Add new directors and reduce the average tenure of the Board of Directors. (Mark McLaughlin and Tony Vinciquerra have been added to the Board and the company plans to appoint one additional independent director.)
  • Focus investments in technologies that scale across core smartphone and adjacent growth opportunities.
  • Reduce investments outside of technology licensing and CDMA technologies to focus on highest-return opportunities.

Qualcomm hopes to leverage its SoC IP in other parts of the market. Its restructuring plan will focus on networking, mobile computing and the Internet of Things. The company also will grow data centre and small cell businesses.

- Jessica Lipsky
  EE Times U.S.

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