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Qualcomm Laying Off 1,231 San Diego Employees As Part Of ‘Cost Reduction Plan’

Visitors look at a display booth for Qualcomm at the Global Mobile Internet C...

Credit: Associated Press

Above: Visitors look at a display booth for Qualcomm at the Global Mobile Internet Conference (GMIC) in Beijing, Thursday, April 27, 2017.

Qualcomm To Begin Round Of Layoffs As Part Of 'Cost Reduction Plan'

GUEST:

Nikhil Varaiya, professor of finance, San Diego State University

Transcript

Qualcomm is laying off 1,231 San Diego employees and another 269 workers in Northern California as part of a $1 billion cost-cutting plan.

The size of the mass cutback was revealed through mandatory 60-day layoff notices received Thursday at the San Diego Workforce Partnership.

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Qualcomm Warn Notice

Qualcomm Warn Notice

Qualcomm layoff notice to the city of San Diego.

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The cellular technology company alerted workers to the layoffs on Wednesday; they become effective June 19.

Qualcomm's cost-cutting plan was part of an effort to prevent a hostile takeover by rival chip company Broadcom. The Trump administration blocked Broadcom's buyout, but lagging stock prices and poor financial performance have left investors worried.

The cuts nearly match in scope Qualcomm's last major restructuring in 2015, when the company laid off 1,315 San Diego employees.

Before Thursday's cuts, Qualcomm employed about 13,000 people in San Diego, as well as 33,800 globally.

“I would say the layoffs are in part related to the pressure to simply improve earnings,” said Nikhil Varaiya, professor of finance, San Diego State University. “Also, the likelihood that licensing rates are not going to be as lucrative for Qualcomm’s technology as in the past.”

In a statement, the company said it considered cost cuts to avoid layoffs, but "we concluded that a workforce reduction is needed to support long-term growth and success, which will ultimately benefit all of our stakeholders."

RELATED: What’s Next For Qualcomm Now That Broadcom’s Hostile Takeover Is No Longer An Option?

A statement provided to KPBS by a Qualcomm spokesperson said the following:

As part of the cost reduction plan announced in January, Qualcomm is conducting a reduction of our full-time and temporary workforce.

A workforce reduction, such as this one, affects not only those employees who are part of the reduction, but their families, co-workers and the community. We recognize this and have offered affected employees supportive severance packages to reduce the impact of this transition on them. We first evaluated non-headcount expense reductions, but we concluded that a workforce reduction is needed to support long-term growth and success, which will ultimately benefit all our stakeholders.

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