Qualcomm to restructure with 15% lower workforce
23 Jul 2015
Qualcomm, the world's biggest manufacturer of mobile semiconductors, was cutting its force by 15 per cent in a 'right-sizing' effort.
According to the California company, it was making other cost-saving moves, following several months of pressure from an activist hedge fund Jana Partners.
The job cuts would represent around 15 per cent of its workforce of about 31,000 and the moves formed part of a 'strategic realignment plan designed to improve execution, enhance financial performance and drive profitable growth'.
The plan aimed to aggressively bring about right-sizing the cost structure with the elimination of approximately $US1.4 billion in spending, including an approximately $300 million reduction in annual share-based compensation grants', the company said in a statement released yesterday.
While Qualcomm had emerged as a star in the new mobile economy, some had complained it failed to return enough to shareholders.
According to chief executive Steve Mollenkopf, the company was 'making fundamental changes to position Qualcomm for improved execution, financial and operating performance'.
The company added it was also reviewing 'financial and structural alternatives available to create stockholder value', including a possible splitting up of the company.
The move follows Jana Partners calling on Qualcomm to spin off its chip business from its highly profitable patent-licensing income, among other changes.
In April Jana, which has a six per cent stake in Qualcomm, had called for the break-up of the highly profitable patent division from chip manufacturing business.
Jana Partners had called for a break-up of the highly profitable patent division from the unit which manufactures chips. Jana had taken a six per cent stake in Qualcomm. - See more at: http://www.skynews.com.au/business/business/world/2015/07/23/qualcomm-unveils-cuts-in-jobs--spending.html#sthash.PnGlvEIN.dpuf
"We decided we were going to take a fresh look at the corporate structure of the company," Qualcomm president Derek Aberle said in an interview, adding that the chipmaker has reviewed its options twice already in the past decade, Reuters reported.
"The environment is constantly changing so the analysis done earlier may not be valid anymore, so it's in that context that we're taking a look at it again now," Aberle said.
Qualcomm expects to complete its strategic review by the end of the year and has agreed to the addition of three new board seats - two for Jana representatives and one through mutual agreement.
Qualcomm, maker of software and chips used in smartphones, tablets and gaming devices was known for its Snapdragon processor used in high-end smartphones made by Samsung Electronics Co, HTC Corp and ZTE Corp.
It was faced with increasing competition from Taiwan's MediaTek Inc as also a few small Chinese companies that specialised in making chips for low-priced phones.