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Economy

Qualcomm Plans To Lay Off 15% Of Its Workforce

Qualcomm Plans To Lay Off 15% Of Its Workforce
Qualcomm Plans To Lay Off 15% Of Its Workforce
Impact Of Qualcomm's Plan To Lay Off 15% Of Its Workforce On San Diego Economy GUESTS:Erik Bruvold, president, National University System Institute for Policy Research Alan Gin, economics professor, University of San Diego

QUALCOMM IS ONE OF SAN DIEGO'S TOP EMPLOYERS AND THOSE ARE SOME OF THE BEST JOBS AROUND. SO WHAT IS IT MEAN WHEN WE HEAR THE CEO ANNOUNCED THIS WEEK THAT QUALCOMM IS LAYING OFF ABOUT 15% OF THEIR WORKFORCE WORLDWIDE? HOW MUCH OF A DING OR A BLOW IS THAT TO SAN DIEGO'S ECONOMY, EMPLOYEES AND INVESTORS? HERE TO TALK ABOUT THAT WE HAVE ERIK BRUVOLD, THE PRESIDENT OF THE NATIONAL UNIVERSITY SYSTEM INSTITUTE FOR POLICY RESEARCH. AND ALAN GIN WHO IS PROFESSOR OF ECONOMICS AT UNIVERSITY OF SAN DIEGO AND THE AUTHOR OF USD INDEX OF LEADING ECONOMIC INDICATORS. THANKS FOR BEING HERE. THANK YOU. I WANT TO START WITH SOME WORDS FROM THE BEGINNING OF REPORT THAT ERIC, YOUR ORGANIZATION PUT OUT JUST A COUPLE OF YEARS AGO AND QUALCOMM SAID ECONOMIC IMPACT AND IT SAYS WILL COME A SAN DIEGO COUNTIES LARGEST POOR JUST FOR-PROFIT PRIVATE SECTOR EMPLOYER. IT HAS BEEN ONE OF THE PRINCIPAL DRIVERS OF SAN DIEGO'S HIGH-TECH BECOMING SPRING NUMEROUS STARTED COMPANIES AND ATTRACTING OTHER MAJOR LAYERS JUST PLAYERS IN THE INDUSTRY TO SAN DIEGO. QUALCOMM IS THE WORLD LEADING CHIPSET PROVIDER AND ONE OF THE MOST VALUABLE PRIVATE-SECTOR EMPLOYERS. AS OF THIS WEEK I'M YESTERDAY, WE KNOW SO FAR THAT QUALCOMM IS MAKING CUTS WITH ONE $.4 BILLION TO ITS WORLDWIDE OPERATIONS AND LAYING OFF 4700 PEOPLE ALTHOUGH WE DON'T KNOW HOW MANY IN SAN DIEGO. START OFF BY TELLING US WHAT HAPPENED? WHAT HAPPENED TO THIS COMPANY? HOW DID IT SUMMER? I THINK THERE ARE TWO THINGS GOING ON IN THE MARKETPLACE THAT ARE PROVIDING THEM HEADWINDS FOR QUALCOMM. FIRST IS REALLY THE CHANGE THAT IS GOING ON GLOBALLY IN THE SMARTPHONE MARKET. AS THESE DEVICES BECOME CHEAPER AND MORE OF A COMMODITY, IF YOU WILL, IS THAT THERE IS PRICE PRESSURE DOWNWARD IN A POST UP ON THE PEOPLE THAT MAKE COMPONENT PARTS FOR THE CELL PHONES AND QUALCOMM MAKES SOME OF THE MOST IMPORTANT TIPS AND THE INTERNAL GUTS OF SMART PHONES. ON THE SECOND THING IS THE REGULATORY HEADWIND. FROM BOTH CHINA AND THE EUROPEAN UNION THAT ARE CHALLENGING QUALCOMM DOMINANCE IN TERMS OF THE INTELLECTUAL PROPERTY BEHIND THOSE CHIPSETS. AND QUESTIONING WHETHER IT IS EXERTING MONOPOLY PRICING POWER IN THOSE MARKETPLACES AND WHETHER THERE NEED TO BE INCREASED REGULATIONS OR BREAKUPS ARE CONSTRAINTS ON THE QUALCOMM BUSINESS PRACTICES BECAUSE OF THE DOMINANT INTELLECTUAL PROPERTY POSITION MAY HAVE. IT JUST HAD TO PAY $1 BILLION FINE IN CHINA, IS A RIGHT? AND ARE IN INVESTIGATION IN EUROPE AS WELL? EUROPEAN -- IT SOUNDS LIKE IT IS NEFARIOUS, IT IS NOT, IT IS LOOKING AT THEIR POSITION IN TERMS OF HOW MUCH INTELLECTUAL PROPERTY THEY HAVE AND WHETHER IT IS A CONSTRAINT ON TRADE. I DO HAVE A QUESTION AS TO WHETHER YOU THINK THE COMPANY HAS BEEN A BIT TOO AGGRESSIVE IN TRYING TO MAINTAIN ITS DOMINANCE AND MIGHT THERE BE ANOTHER SHOE TO DROP IN TERMS OF MULTIS? I DON'T THINK THAT'S THE CASE. THEY HAVE AN ADVANTAGE, TO HAVE THE KNOWLEDGE IN TERMS OF TECHNOLOGY AND IT IS NATURAL FOR A COMPANY TO TRY TO TAKE ADVANTAGE OF THAT PARTICULAR SITUATION. THERE IS NOT MUCH THAT THEY CAN'T DO OTHERWISE. YOU ARE SAYING THEY DID THE RIGHT THING AT THE COMPANY TO TRY TO MAINTAIN THEIR DOMINANCE? ABSOLUTELY. WHAT GIVES THEM VALUE AND HAS REVENUE GROWTH IN SECONDARY EFFECTS, IMPORTANT GROWTH IN SAN DIEGO, IS IMPORTANT INTELLECTUAL PROPERTY DISCOVERIES THAT THEY MADE EARLY ON IN THEIR HISTORY WHICH THEY FURTHER REINFORCED THAT HAVE GIVEN THEM A SIGNIFICANT CENTRAL POSITION AS THE GROWTH IN THE WORLDWIDE SMARTPHONE MARKET HAS EXPLODED. ACCORDING TO YOUR REPORT EVERY YEAR QUALCOMM CREATED A BIGGER ECONOMIC IMPACT AND THE LONDON OLYMPIC GAMES. IT REALLY HAS MADE A HUGE ECONOMIC IMPACT ALAN, IN THE BIGGER PICTURE HOW BIG ABLE& TO SAN DIEGO'S OVERALL ECONOMY? I THINK OF IT IS A BIG BLOW. THEY HAVEN'T RELEASED THE BREAKDOWN OF WHERE THOSE LAYOFFS ARE GOING TO OCCUR BUT HALF THE COMPANIES EMPLOYEES ARE LOCATED IN SAN DIEGO REGION. AND SO AS A RESULT OF THAT I THINK A SIZABLE PORTION OF THAT 4700 JOB CUTS ARE GOING TO BE IN SAN DIEGO. AND AS YOU INDICATED, THOSE ARE PRETTY GOOD PAYING JOBS. NOT ONLY ARE THOSE JOBS LOST BUT A LOT OF SPENDING IS TAKEN OUT OF THE LOCAL ECONOMY. THAT IS GOING TO AFFECT THE HOUSING MARKET, RESTAURANTS, RETAIL. MY ESTIMATE IS THAT WHEN YOU TAKE INTO ACCOUNT ALL OF THE SECONDARY EFFECTS IT WILL PROBABLY INCREASE OUR UNEMPLOYMENT RATE BY ABOUT 3/10 OF A PERCENT. WHICH DOESN'T SOUND LIKE TOO BAD. THAT IS ABSOLUTE. I THINK ALLEN IS RIGHT ON THE GROSS IMPACT, THE NET, I DON'T WANT TO SOUND POLLYANNA-ISH OR OVERLY OPTIMISTIC, BUT THE NET COULD BE LESS. THE REASON WHY IS THAT DEPENDING UPON HOW THOSE ARE STRUCTURE, THE LAYOUTS COULD WILL OCCUR WITH PEOPLE WITH HIGHLY VALUED SKILLS IN THE WORKFORCE IN A PART OF OUR ECONOMY WHERE IMPLEMENT IS ALREADY TIGHT AND POSITIONS ARE GOING UNFILLED. I KNOW THIS SOUNDS LIKE I AM BEING WHISTLING IN THE GRAVEYARD AND FOR PEOPLE BEING AFFECTED THERE IS UNCERTAINTY BUT IT IS NOT LIKE, FOR EXAMPLE, AN AUTO PLANT CLOSING IN FLAMES WHEN THE AUTOMOBILE INDUSTRY AS A WHOLE IS GOING DOWN. TECHNOLOGY IS EXPANDING. THIS PARTICULAR NICHE OF TECHNOLOGY IS A GROWING PART OF THAT INDUSTRY SO THE GOOD NEWS, IF THERE IS, THE SILVER LINING FOR SAN DIEGO, IS THAT THESE JOB CUTS 80 WELL ABSORBED BY A LABOR MARKET THAT IS ALREADY TIGHT AND CONSTRAINED. APPARENTLY THERE IS A MEETING OF 3:30 THIS AFTERNOON OF EMPLOYEES THAT WE FIND OUT MORE ABOUT WHO IN SAN DIEGO IS GOING TO BE LOSING THEIR JOBS, BUT YOU'RE SUGGESTING THERE IS ANOTHER OTHER JOBS -- WON'T HAVE TO LEAVE TOWN TO FIND ANOTHER JOB. TECH COMPANIES BOTH LOCALLY AND NATIONALLY HAVE COMPLAINED ABOUT THE LACK OF SKILLED TRAINED EMPLOYEES. HERE IS AN OPPORTUNITY TO TAKE ON SOME OF THESE EMPLOYEES NOW THAT THEY WILL BE SEARCHING FOR JOBS. AS REUTERS REPORTED A MONTH AGO, ONE OF THE IRONIES HERE IS THE COMPETITORS THAT ARE TRYING TO DRIVE CHEAPER CHIPSETS INTO SMARTPHONES, SOME OF THEM ARE SETTING UP IN SORRENTO VALLEY TO GRAB AND ATTRACT EXIT QUALCOMM EMPLOYEES TO ADD TO THEIR SKILL SET AND KNOWLEDGE. APPARENTLY THE AVERAGE INCOME AMONG SAN DIEGO TELECOM JOBS IS $108,000. DO YOU THINK THAT PEOPLE WHO LOSE THEIR JOBS FROM QUALCOMM WOULD BE ABLE TO FIND A SIMILAR SALARY WITH ANOTHER COMPANY? THAT IS A CRYSTAL BALL THAT IS NOT GOOD ENOUGH FOR ME BUT WHAT I WILL SAY IS THAT TO THE EXTENT THAT WHAT WE'RE TALKING ABOUT IS JOB CUTS THAT ARE GOING TO CUT INTO THE TECHNICAL SKILLED FORCE IN QUALCOMM, IMPLEMENT HAS BEEN TIGHT, JOB OPENINGS HAVE GONE WANTING. I THINK THERE IS A REASONABLE PROSPECT THAT THOSE EMPLOYEES WILL BE ABLE TO FIND A SIMILAR SORTS OF JOBS. THAT -- PROFESSIONAL, TECHNICAL AND SCIENTIFIC SERVICES IS THE FASTEST-GROWING SECTOR. IF YOU LOOK AT EMPLOYMENT YEAR-OVER-YEAR IT IS UP ALMOST 8000 JOBS. THAT IS THE LEADING SECTOR IN TERMS OF JOB GROWTH IN THE LOCAL ECONOMY. ONE THING I WOULD ALSO ADD TO DeLAY THE IDEA THAT ECONOMISTS ARE ALWAYS DISMAL AND WE ARE ALWAYS NEGATIVE, IF YOU LOOK AT SAN DIEGO'S ECONOMIC HISTORY, SOME OF THE MOST IMPORTANT SORT OF CATALYTIC EVENTS THAT WE HAVE HAD IN OUR HISTORY, THE ACQUISITION OF LINK OF IT BY NATIONAL DEFENSE CONTRACTORS AND THE SPINOFFS THAT OCCURRED THERE AND THEN ACQUISITION OF FIBER TECH BY BIG PERMIT AND THE GROWTH OF OUR LIFE SCIENCE INDUSTRIES HAVE COME FROM CORPORATE RESTRUCTURING AND CHANGE. I DON'T WANT TO SOUND OVERLY POLLYANNA-ISH BUT THERE IS A REASONABLE CHANCE THAT THE EMPLOYEES THAT ARE AFFECTED BY THIS QUALCOMM DECISION HAD HIS SKILLS THAT ARE GOING TO BE VALUED IN THE WORKPLACE AND EXPERTISE AND TECHNIQUES THAT CAN LEAD TO ADDITIONAL STARTUPS AND ADDITIONAL KINDS OF COMPANIES THAT CAN THRIVE. IT HAS UP IN OUR HISTORY IN THE PAST AND THERE IS NO REASON FOR YOU TO BELIEVE THAT COULDN'T OCCUR WITH THE CHANGES THAT ARE BEING ANNOUNCED YESTERDAY. HOWEVER YOU DID SAY THE REPORT THAT THE JOBS CREATED A QUALCOMM GENERATES ABOUT TO .3 JOBS IN THE REGION AND IN OTHER AREAS. I GUESS THE QUESTION IS IF QUALCOMM IS LOSING JOBS BUT PEOPLE FIND THOSE JOBS IN OTHER COMPANIES WILL THEY CONTINUE TO KEEP GENERATING THE SURROUNDING JOBS OR DOESN'T -- DO WE ACTUALLY DO SOMETHING FIGHT LOSING QUALCOMM JOBS? AGAIN, WHEN IT THE ATTRACTIVE FEATURES OF QUALCOMM JOBS IS THAT THEY ARE EXTREMELY HIGH PAYING. WHAT HAPPENED TO THOSE WAGES GET REDISTRIBUTED AND SPENT THROUGHOUT THE ECONOMY AND FILTER DOWN AND RECIRCULATE. BUT, AGAIN, AS ALAN SAYS, THE AREA IN WHICH THEY ARE LOCATED INCOME OF THIS PROFESSIONAL AND SCIENTIFIC SERVICES IS FAST-GROWING AND WELL-PAYING. THERE IS A REASONABLE CHANCE THAT THOSE WAGES WILL BE REPLACED AS PEOPLE MOVED TO OTHER OPPORTUNITIES. LET'S TALK ABOUT THE EFFECT ON INVESTORS. FOLLOWING THE THIRD QUARTER CALL YESTERDAY QUALCOMM STOCK VALUE FILL ONE .4%. IS THIS SOMETHING THAT IS GOING TO BENEFIT INVESTORS OR HOW WILL IT AFFECT INVESTORS? I THINK WILL HELP INVESTORS IN THE LONG-TERM BY CUTTING THE COST. THEY WILL INCREASE THEIR PROFITABILITY AND AS A RESULT OF THAT THEIR SHARE PRICE SHOULD GO UP. EVEN THOUGH IT WAS DOWN YESTERDAY, IT HAS BEEN DOWN SIGNIFICANTLY FROM ITS HIGH BECAUSE OF THE WEEK EARNINGS PERFORMANCE AND TO THE EXTENT THAT THIS BOOST EARNINGS AND IT WILL GET THE STOCK PRICE INCREASE AS WELL. AND WHAT I WOULD ADD, THIS IS THE PLACE WHERE ECONOMISTS HAVEN'T HAD A LOT OF REALLY GOOD RESEARCH SO IT'S HARD TO GET GOOD QUANTITATIVE DATA BUT ANECDOTALLY I THINK THAT ACTUALLY THE SHARE PRICES IS PROBABLY TAKING THE WORST IMPACT IN SAN DIEGO. QUALCOMM HAS BEEN KNOWN FOR SHARING ITS SHARE PRICES FOR EMPLOYEE STOCK PURCHASE PLANS OR STOCK OPTIONS THROUGHOUT ITS EMPLOYEES. TO THE EXTENT TO WHICH THOSE PEOPLE ARE FEELING THAT THEIR BALANCE SHEET HAS SHRUNKEN BECAUSE OF THE DECLINING SHARE PRICE. THEY MAY BE MORE CONSTRAINED IN THEIR CONSUMER SPENDING. THAT MAY HAVE ALREADY HAD AN EFFECT IN TERMS OF DAMPENING DOWN A LITTLE BIT OF OUR POTENTIAL ECONOMIC GROWTH. APPARENTLY ON THE CALL YESTERDAY ONE OF THE BIG QUESTIONS MOST OF THE INVESTORS WERE ASKING WAS IS THE COMPANY THINKING OF SPLITTING UP THE COMPANY INTO TWO SEPARATE COMPANIES? CAN YOU EXPLAIN HOW THAT MIGHT AFFECT INVESTORS AND WOULD IT AFFECT EMPLOYMENT AS WELL? I THINK THAT IS HARD TO KNOW BUT IN A NUTSHELL WHAT THE INVESTOR, THE ACTIVIST AND VECTORS -- INVESTORS HAVE BEEN PUSHING FOR IS TO SPLIT QUALCOMM APART INTO THE AREA THAT CONTROLS AND HAS POSITION IN TERMS OF THIS INTELLECTUAL PROPERTY THAT I TALKED ABOUT. AND THE PART OF THE COMPANY THAT MANUFACTURES CHIPSETS, WHICH ACTUALLY COMES FOR THE REVENUE, THE BIGGEST REVENUE FOR QUALCOMM, IS NOT AS POSSIBLE -- PROFITABLE AS HIS OTHER PART. THERE ARE ARGUMENTS THAT BY SPLITTING THOSE PARTS OF PART YOU GAIN GREATER RETURN FOR SHAREHOLDERS. HOW THAT WOULD PLAY OUT IN TERMS OF THE SAN DIEGO ECONOMY I THINK IS TO BE DETERMINED. QUALCOMM HAS LONG ARGUED THAT BY KEEPING THOSE PARTS TOGETHER IT CREATES GREATER SYNERGY AND MOST IMPORTANT POSITIONS ITSELF FOR FUTURE GENERATIONS OF CHIP SET DEVELOPER SMARTPHONES. EXECUTIVE SALARIES, THE COMPANY HAS BEEN GETTING PRESSURE FROM INVESTORS WERE A NUMBER OF ASPECTS IN THE WAY IT RUNS HIS BUSINESS. ONE OF THEM WAS EXECUTIVE PAY. THE CEO IS THE SEVENTH HIGHEST PAID EXECUTIVE IN SAN DIEGO. HE EARNED $13.75 MILLION A YEAR IN TOTAL COMPENSATION. TO GET ANY SENSE THAT THESE CUTS ARE GOING TO AFFECT THE PEOPLE AT THE TOP? I THINK THERE IS GOING TO BE SOME LAYOFFS IN MIDDLE MANAGEMENT. I THINK SOME PEOPLE IN THAT LEVEL WILL BE IMPACTED. A LOT OF THAT COMPENSATION IS THROUGH STOCK OPTIONS. IF THIS MOVE HELPS BOOST EARNINGS AND STOCK PRICES THEY ACTUALLY COULD END UP DOING EVEN BETTER WITH STOCK PRICE RISING. AIN'T THAT WAY? PEOPLE AT THE TOP MAKE OUT BETTER AND THE REST HAVE TO DO. THE CORPORATE RENTAL BE? QUALCOMM HAS GIVEN OUT MILLIONS OF DOLLARS TO NONPROFITS AND A LOT OF COMPANIES I THINK WERE A LOT OF ORGANIZATIONS REALLY RELY ON QUALCOMM GENEROSITY OR DO THINK THEY MAY BE LESS -- BE LOOKING ELSEWHERE? I THINK THAT IS ANOTHER CHALLENGE, ESPECIALLY IF THE ACTIVIST INVESTORS WOULD CLIMBS DOWN. WE ESTIMATED THAT QUALCOMM ITSELF AND QUALCOMM FOUNDATION DONATED OVER A TEN-YEAR PERIOD $170 MILLION. WE ESTIMATED THAT $85 MILLION OF THAT WENT TO SAN DIEGO NONPROFITS. ABOVE AND BEYOND THAT, PROBABLY SOMEWHERE BETWEEN $30 MILLION-$59 IS ACCOUNTABLE TO QUALCOMM EMPLOYEES THAT ARE GIVING AND OF COURSE AT THE SENIOR LEVEL THE CEO AND FOUNDER LEVELS, THERE IS ADDITIONAL PHILANTHROPY THAT HAS FLOWED TO SAN DIEGO NONPROFITS. THAT IS NOT ALL GOING TO GO AWAY WITH CHANGES, BUT CLEARLY A CHALLENGE MOVING FORWARD FOR OUR REGION IS THAT AS QUALCOMM PARTICIPATES IN A MARKETPLACE WHERE PRICE AND SPENDING ARE CONSTRAINED BECAUSE OF THE COMMODITY -- COMMODITIZATION OF SMARTPHONES THAT COULD PUT A DAMPER ON PHILANTHROPIC GIVING. WHEN JUST ONE ADDITIONAL THING THERE IS A QUALCOMM EMPLOYEES HAVE BEEN INVOLVED IN LOCAL COMMUNITIES AS WELL. THEY HAVE BEEN VOLUNTEERING. FOR EXAMPLE IN MY SONS MIDDLE SCHOOL WE HAVE A SCIENCE TEAM AND WE HAVE SOME QUALCOMM EMPLOYEES TO VOLUNTEER AS COACHES. SO IT WILL AFFECT THE FABRIC. IF THOSE PEOPLE CAN GOING GET JOBS AND OTHER LOCAL COMPANIES AND HOPEFULLY THE TRANSITION WILL BE THE DIFFICULTIES WILL BE LESSENED. ISN'T IT TRUE THAT ONE OF THE RIVALS THAT IS IN FACT SORT OF PROVIDING MORE COMPETITION AND THEREFORE AS A RESULT QUALCOMM IS HAVING TO TIGHTEN ITS BELT, MEDA TEXT, MEDIA TECH RATHER, IS ALSO IN SAN DIEGO? IS IT POSSIBLE SAN DIEGO WILL RETAIN A SIMILAR SHARE OF THE OVERALL MARKET, THIS IS THE QUALCOMM WON'T HAVE SUCH A LARGE FOOTPRINT? YES. I THINK, AGAIN, WHAT IS HAPPENING, I THINK IT WILL BE LANDING SPOTS AT MEDIA TECH AND OTHER FIRMS FOR THESE INFECTED -- AFFECTED EMPLOYEES. I THINK WHAT IS GOING ON WORLDWIDE IS THAT THE SMARTPHONE MARKET IS BIFURCATING. YOU HAVE GOT A LUXURY PRODUCT IN THE iPHONE WHICH SEEMS TO HAVE A MARKET SHARE AND IS POSITIONED WHERE IT IS. THE REST OF THE MARKET IS BEING DRIVEN, AGAIN, AS IS PRODUCTS BECOME UBIQUITOUS. THE FEATURES BECOME ALL THE SAME FOR EVERYBODY. PRICES BECOMING KING. IN TECHNOLOGY CIRCLES OFTEN TIMES WHEN THINKING ABOUT THAT WE REFER TO THAT AS THE COMMODITIZATION OF A PRODUCT OR I'M NOT SURE THAT SAN DIEGO CAN RETAIN ITS POSITION IN THE SMARTPHONE MARKET BECAUSE PEOPLE ARE GOING TO BE LOOKING FOR LOWER COST LOCATIONS AND REALLY TRYING TO DRIVE DOWN PRODUCTION AND RESEARCH AND ONLY COSTS TO BRING SMARTPHONES TO THE MARKET AT THE CHIEF LIST PRICE AND. SO, THAT IS ALLEN'S PHONE. ALAN, JUST LOOKING AT YOUR INDEX OF LEADING ECONOMIC INDICATORS YOU ARE IN A GOOD POSITION TO SAVE SMARTPHONE CHIP MAKERS LIKE QUALCOMM ARE PERHAPS NOT GOING TO BE QUITE SO DOMINANT IN SAN DIEGO WOULD YOU SAY A NUMBER -- ANOTHER ELEMENT OF THE MARKET, PERHAPS ANOTHER KIND OF TECH COMPANY, I NOTICED ELI LILLY IS DOUBLING ITS WORKSPACE IN SAN DIEGO INCLUDING TAKING OVER QUITE A BIT OF THE FLOOR SPACE BEING VACATED BY QUALCOMM. GOOD DAY, PERHAPS, FILL THE GAP? DEFINITELY. THE ECONOMY IS A MUCH BETTER POSITION NOW THAN IT HAS BEEN IN THE PASS. WE HAVE GOT A MORE DIVERSIFIED ECONOMY, TELL US MEDICATIONS, BIOTECH, DEFENSE, SECURITY, EVEN GREEN TECHNOLOGY HER AREAS WHERE WE HAVE GOT SUBSTANTIAL SECTORS IN SAN DIEGO. SO, THIS WILL HURT A LITTLE BIT BUT I THINK RIGHT NOW OTHER SECTORS ARE POSITIONED TO HELP MAKE UP THE SLACK. I THINK THAT IS REALLY IMPORTANT. IF WE LOOK AT THE INNOVATION ECONOMY QUALCOMM IS AN IMPORTANT PART OF IT, BUT THE SAN DIEGO WORKFORCE CONSTITUTES MAYBE ABOUT 5% OF THAT. THERE IS A 95% THAT IS LOCATED IN OTHER COMPANIES THAT ARE DOING OTHER THINGS. WE ARE REALLY DIFFERENT THAN WE WERE 20 OR 30 YEARS AGO WHERE WE BUILT MISSILES AND WE HAD TOURISM. AND WE HAD ONE BIG COMPANY, GENERAL DYNAMICS, THAT HAVE SUCH A HUGE FOOTPRINT. NOW THE CHALLENGES, ESPECIALLY ENTERPRISE SPECIFIC CHALLENGES, TO ACCOMPANY ARE LESS IMPORTANT TO SAN DIEGO BECAUSE OF THE DIVERSIFICATION THAT ALLEN REFERENCE. AND THE WAY IN WHICH WE HAVE GOT MULTIPLE CHIPS, IF YOU WILL IN DIFFERENT PLACES AROUND THE REGION. OKAY. SO IT IS NOT COMPARABLE WITH GENERAL DYNAMICS BY ANY MEANS. WE WERE LOOKING MUCH MORE RESILIENT THAN THAT SAN DIEGO ECONOMY. A WANTED TO ASK YOU -- WHAT IS YOUR PREDICTION FOR HOW THIS RESTRUCTURING WILL AFFECT THE COMPANIES RECOVERY? I THINK IS GOING TO HELP IN TERMS OF REDUCING COSTS. IT IS A TREND WE ARE SEEING IN CORPORATE AMERICA. THAT WORRIES ME A LITTLE BIT. THE COMPANY STRIVING TO COWORKERS, CUT SALARIES, CUT LABOR COSTS. WHILE THAT BOOST PROFITS SOMETIMES IT DOESN'T HURT IN TERMS OF THE ECONOMY. THAT IS PUTTING A BLOW TO THE MIDDLE CLASS IN THIS COUNTRY. I THINK IT IS TOO EARLY TO TELL. I DO THINK THAT WORLDWIDE FOR SAN DIEGO'S HISTORIC LEADERSHIP IN WIRELESS TECHNOLOGY, I DO THINK THERE IS SOMETHING INTERESTING GOING ON HERE IN TERMS OF THE INCREASED COMMODITIZATION. HOW THAT PLAYS ITSELF OUT IS I THINK DIFFICULT TO SAY BUT I WILL SAY ONE THING, THE ECOSYSTEM -- THOSE FOUND REALLY BUZZWORD -- THE ECOSYSTEM IN SAN DIEGO IS ONE THAT SEEMS TO PROMOTE INNOVATION AND NEW COMPANY GROWTH AND THAT I THINK IS GOOD FOR HOW OUR ECONOMY RESPONDS LONG-TERM TO SHIFTING GLOBAL MARKETPLACES. SO THIS IS KIND OF STIRRING THE POT. AGAIN, I JUST GO BACK TO THINK OF IT AND HYBRID TECH AND I AM SURE THAT THE DAYS THAT ACQUISITIONS AND LAYOFFS WERE ANNOUNCED FOR THOSE TWO COMPANIES WERE SIMILARLY SOME WORRIES THAT WERE GOING ON. AND THEN THERE IS A GREAT CHART THAT SHOWS SONS AND GRANDSONS AND GREAT GRANDSONS FROM BOTH OF THOSE COMPANIES AND HOW THEY REALLY GAVE BIRTH TO THE LIFE SCIENCE AND THE HIGH TECHNOLOGY THAT CIVILIAN HIGH TECHNOLOGY INDUSTRY IN SAN DIEGO COUNTY. INTERESTING. THAT IS A GREAT PLACE TO END IT WITH SOME POTENTIAL FUTURE. THANK YOU SO MUCH FOR JOINING US. THAT IS -- THANK YOU. THANK YOU.

Qualcomm Plans To Lay Off 15% Of Its Workforce
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.