Qualcomm Inc., responding to pressure from an activist investor, said Wednesday it expects to cut thousands of jobs under a restructuring plan to slash annual spending by $1.4 billion.
San Diego-based Qualcomm is the nation's leading maker of so-called chipsets, or collections of integrated circuits, used in mobile phones. It also earns substantial profit from licensing its technology.
The company's plan includes a 15% cut in its full-time chip-making workforce along with “significant reductions in our temporary workforce” and certain office closures, Qualcomm Chief Executive Steve Mollenkopf told analysts.
He did not specify the exact number of jobs targeted, and Qualcomm doesn't break out its employee count by division. But Qualcomm employs about 31,000 full-time and temporary employees, so the cuts could amount to 4,000 employees or more.
Qualcomm unveiled the plans while reporting a 47% drop in its fiscal third-quarter profit. The company has been struggling with slowing sales growth, lower-priced competition and reduced earnings. Its stock is down about 15% this year.
The company stopped short of proposing that its chip-making and licensing lines be separated into stand-alone businesses. But Qualcomm said its “strategic realignment plan” would include reviewing such a breakup idea.
Qualcomm has been under pressure to boost shareholder returns from activist investor Jana Partners, which owns nearly $2 billion of Qualcomm stock.
In the quarter ended June 28, Qualcomm reported net income of $1.18 billion, or 73 cents a share, down from $2.24 billion, or $1.31, a year earlier. Revenue fell to $5.83 billion from $6.81 billion a year earlier.
After excluding share-based compensation and other adjustments, Qualcomm's per-share profit was 99 cents, higher than the 95 cents expected by analysts polled by FactSet Research.