Qualcomm on Wednesday announced that it will slash thousands of jobs in a bid to reduce spending and confirmed that it will undertake a strategic review that could lead to the company being split up.
The news came alongside the chip maker’s fiscal third quarter results presentation, which sh owed hefty declines in turnover and profit, leading to a reduction in full-year guidance.
As rumoured earlier this week, the U.S. firm unveiled a strategic realignment plan through which it aims to generate US$1.4 billion in spending cuts. To reach that goal it will eliminate 15% of its workforce, which amounts to well over 4,000 positions.
The company had 31,300 employees on its books, including part-time and temporary staff, at the end of September, the close of its 2014 fiscal year.
The plan will also see Qualcomm undertake a review of its options from a financial and structural point of view, "including possible business separation alternatives".
On Monday the Wall Street Journal cited unnamed sources as saying that a break-up was one of a number of alternatives the chip maker would look at following pressure from an activist shareholder, Jana Partners. Such a split would likely see Qualcomm’s chip making business separated from its patent licensing business.
The review will also take into account capital return opportunities and "other potential strategic and financial alternatives available to the company to create stockholder value," Qualcomm said.
It added that it will not publicly comment on the review until after its completion, which is expected to take place during this calendar year.
"We are very well positioned to capitalise on the significant long-term opportunities before us as mobile computing dramatically expands beyond the smartphone," said Qualcomm CEO Steve Mollenkopf.
"The actions we are taking today are designed to ensure that we are properly structured to seize these opportunities while delivering improved near-term performance," he said.
Questions can certainly be asked about Qualcomm’s performance.
The firm posted a 15% decline in revenues to $5.8 billion, while ne t income fell by 47% to $1.2 billion.
Earnings per share stood at $0.73, down by 44% year-on-year.
In the fourth quarter it expects to report revenues of $4.7 billion-$5.7 billion, a decline of between 15% and 30% on the previous year’s Q4. It expects earnings per share to fall by 32%-54% to $0.51-$0.76.
It also reduced its guidance for the full year.
The firm now expects annual turnover to come in at $24.5 billion-$25.5 billion, down from its previous $25 billion-$27 billion estimate. Earnings per share will reach 3.05-$3.30, it said, having previously forecast $3.28-$3.68.
