Qualcomm Restructures to Cut $1.4B in Costs

Chipmaker announced a strategic realignment plan along with its third quarter earnings as competition and chipset woes forces it to cut costs.

Sarah Thomas, Director, Women in Comms

July 22, 2015

2 Min Read
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

About the Author(s)

Sarah Thomas

Director, Women in Comms

Sarah Thomas's love affair with communications began in 2003 when she bought her first cellphone, a pink RAZR, which she duly "bedazzled" with the help of superglue and her dad.

She joined the editorial staff at Light Reading in 2010 and has been covering mobile technologies ever since. Sarah got her start covering telecom in 2007 at Telephony, later Connected Planet, may it rest in peace. Her non-telecom work experience includes a brief foray into public relations at Fleishman-Hillard (her cussin' upset the clients) and a hodge-podge of internships, including spells at Ingram's (Kansas City's business magazine), American Spa magazine (where she was Chief Hot-Tub Correspondent), and the tweens' quiz bible, QuizFest, in NYC.

As Editorial Operations Director, a role she took on in January 2015, Sarah is responsible for the day-to-day management of the non-news content elements on Light Reading.

Sarah received her Bachelor's in Journalism from the University of Missouri-Columbia. She lives in Chicago with her 3DTV, her iPad and a drawer full of smartphone cords.

Away from the world of telecom journalism, Sarah likes to dabble in monster truck racing, becoming part of Team Bigfoot in 2009.

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