San Diego-based Qualcomm confirmed Wednesday that it plans to lay off 15 percent of its global workforce and study a restructuring under pressure from a hedge fund investor.
The changes include cutting costs by $1.1 billion a year, adding three new board members approved by the hedge fund Jana Partners, and studying a possible spin off of part of the company.
Review of the corporate structure will be completed by the end of the year, the company said, and will include “possible business separation alternatives.”
“We are making fundamental changes to position Qualcomm for improved execution, financial and operating performance,” said CEO Steve Mollenkopf. “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.”
Jana Partners applauded the announcement. “We support the bold steps the board and management are pursuing to enhance stockholder value and are pleased to have worked constructively with them in this endeavor,” said Barry Rosenstein, managing partner.
The company also announced significantly lower profit and revenue for its third fiscal quarter. Qualcomm earned $1.2 billion, or 73 cents per share, on revenue of $5.8 billion in the quarter ended June 28, down from earnings of $2.2 billion, or $1.31 per share, on revenue of $6.8 billion a year ago.
Qualcomm said it expects its sales and revenue to be lower in the fourth fiscal quarter as well.
Shares of of the company, off 21 percent over the past year, slipped 2 percent to $62.70 in after-hours trading on Wednesday.
Qualcomm is a world leader in 3G, 4G and next-generation wireless technologies. It is biggest supplier of chips for mobile phones and also licenses key patents to other manufacturers. Jana Partners has urged the company to split the two businesses.
The past year has been turbulent for Qualcomm, with key customer Samsung beginning to use its own chips, China levying a $975 million antitrust fine and the European Union beginning an investigation.
