Qualcomm Plans To Lay Off 15% Of Its Workforce
Thursday, July 23, 2015
We're sorry. This audio clip is no longer available. A transcript for audioclip 24923 has been made available.
While the company did not specify how many employees would lose their jobs, it announced that it expected the cuts would save around $1.1 billion.
A massive drop in revenues and net income prompted Qualcomm Inc., the San Diego-based provider of computer chips for mobile devices, to announce a plan Wednesday to reduce its workforce to save costs and study whether to split up the company.
While the company did not specify how many employees would lose their jobs, it announced that it expected the cuts would save around $1.1 billion. CNBC reported that the personnel cuts will amount to 15 percent of the workforce.
Those reductions could lead to thousands in San Diego losing their jobs at one of city's largest non-government employers.
The firm will also eliminate $300 million in stock-based incentives.
"We are making fundamental changes to position Qualcomm for improved execution, financial and operating performance," said Steve Mollenkopf, CEO of Qualcomm. "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."
Qualcomm, which has been buffeted by increasing competition and decreased revenues, also released its financial report for the third quarter showing net income of $1.2 billion, down 47 percent from the same period last year. The sum was 12 percent higher than the second quarter, however.
The company reported earnings per share of 73 cents, compared to $1.31 last year, and 63 cents in the second quarter.
The company also reported revenue of $58 billion in the third quarter, a 14 percent drop from the same time last year, and 15 percent less than the second quarter.
A review of its corporate structure willl be completed by the end of this calendar year, according to Qualcomm. Plans also call for streamlining the engineering organization, reducing the number of offices and increasing resources in lower-cost regions.
Qualcomm additionally announced that it added two new board members, Mark McLaughlin and Tony Vinciquerra, and that one more director will be appointed later.
The two replace retired Gen. Brent Scowcroft and Duane Nelles, who retired from the board. Sir Donald Cruickshank previously informed the company that he will not stand for re-election to the board in 2016.
Qualcomm has faced regulatory challenges as well. The company recently agreed to pay nearly $1 billion to settle an anti-trust investigation in China. It now faces another anti-trust investigation in Europe over its chip pricing.
To view PDF documents, Download Acrobat Reader.