Qualcomm to cut 4,700 employees
As part of a restructuring plan, Qualcomm will dismiss around 4,700 employees, or 15 per cent of its total workforce. The mobile giant also revealed its plan to cut $1.4 billion in annual costs by 2016 and its quarterly result, which showed lower revenues that are still in line with expectations.
Revenues for Qualcomm’s fiscal third quarter were $5.8 billion, down $1 billion year-over-year and $1.1 billion sequentially. Net profit was down a whopping 47 per cent from the prior year to $1.2 billion.
Amid an industry slowdown in smartphone growth, the company forecast its fourth quarter revenue would be down 15-30 per cent from the prior year to $4.7 to $5.7 billion. It estimated it will sell 170 to 190 million of its MSM cell phone chip sets in the period, down 19-28 per cent from last year.
The results amount to the first big downturn for the company that has been a darling of the go-go mobile era. Qualcomm attributed the decline to a decrease in licensing revenues, a burn off in inventory and reduced demand for premium chip sets from a vertical customer—likely Samsung—as well as lower than expected sales in China.
Despite dips in sales, the handset business remains an attractive market where increasing profitability is important, CEO Steve Mollenkopf said. Qualcomm expects the industry and its relationships in China to improve by the end of the year. It also anticipates the roll out of LTE with carrier aggregation in China.