Mobile/Wireless Components

Qualcomm Restructures to Cut $1.4B in Costs

Qualcomm announced a restructuring plan Wednesday designed to cut $1.4 billion in spending, at the same time it revealed third quarter earnings and lowered its semiconductor forecast for the fourth quarter.

Qualcomm Inc. (Nasdaq: QCOM)'s "Strategic Realignment Plan," in agreement with activist shareholder JANA Partners, will see it cut $1.4 billion in spending, including $300 million in annual share-based compensation. Qualcomm would also review its financial structure and add two outside directors, Mark McLaughlin and Tony Vinciquerra, to its Board of Directors, with plans to add one more and let two current directors go. (See Qualcomm Announces Strategic Realignment Plan.)

Qualcomm CEO Steve Mollenkopf said in April that cost cuts were coming, and the chipmaker was rumored to be planning thousands of layoffs and potentially even breaking up the company. Today's announcement didn't outline where the cost cuts would occur but said Qualcomm is exploring structural alternatives to splitting the company. (See Qualcomm Faces Major Job Cuts – Reports.)

The statement reads that Qualcomm will be prepping "reductions in headcount and temporary workforce, streamlining the engineering organization, reducing the number of offices and increasing the mix of resources in lower-cost regions."

"We are making fundamental changes to position Qualcomm for improved execution, financial and operating performance," Mollenkopf said in a statement. "We are right-sizing our cost structure and focusing our investments around the highest return opportunities while reaffirming our intent to return significant capital to stockholders and refreshing our Board of Directors."

For more on Qualcomm, visit the mobile/wireless components section here on Light Reading.

Qualcomm has been affected by increased competition, antitrust probes and chipset issues of late. It says it will focus on investing in technology that "scale across core smartphone and adjacent growth opportunities, such as in its leading modem and other differentiated technologies," while also reducing its investment in activities outside of Qualcomm Technology Licensing (QTL) and Qualcomm CDMA Technologies (QCT), its semiconductor division. (See Qualcomm to Pay $975M in China Antitrust Spat and Eurobites: Qualcomm May Face EU Antitrust Probe.)

The chipmaker announced its third quarter earnings in parallel with the restructuring. It reported earnings of 99 cents per share on revenues of $5.8 billion. Wall Street consensus was for earnings of 95 cents per share on $5.85 billion in revenue. Qualcomm also reduced its outlook for QCT in the fourth quarter. (See Qualcomm Announces 3rd Quarter Fiscal 2015 Results.)

Qualcomm's stock was trading down 1.46%, or .95 points, to $64.19 after the realignment and earnings were announced Wednesday afternoon.

— Sarah Thomas, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editorial Operations Director, Light Reading

shashidhara 7/23/2015 | 10:09:53 PM
Re: cuts and splits Looks like the recent acquisition of a Bluetooth / WLAN company's  workforce would be affected the most.
MordyK 7/23/2015 | 3:45:46 PM
Re: cuts and splits Or it can be the catalyst of a bunch of startups in the wireless space with close cooperation with QUalcomm, in effect creating a wireless tech hub akin to Cambridge, Finland (Nokia), etc.

While hardware and their underlying chips are ever more important with the increase in software, there comes a point where the time for profit before the "generic" players make comparable products is shrinking drastically.

This is why I'm befuddled that QUalcomm never really made a whilehearted play to create a developer platform with cool capabilities that are enhanced with uniquely integrated capabilities within their chips and those of their licensees, in effect creating a real value for Snapdragon Inside or Snapdragon Compliant. SUre they've made some efforts but without a serious commitment and strategy theyve al floundered.
Mitch Wagner 7/22/2015 | 6:20:19 PM
Re: cuts and splits Sure to be a blow to the local economy here in San Diego. 
Sarah Thomas 7/22/2015 | 6:07:58 PM
cuts and splits By the way, those cost cuts equate to letting 15% of its workforce go. And, it said it would make its decision on splitting up the patent royalty business and its chip design business by the end of the year. Wow, things have changed since the days of CDMA dominance. 
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