14 DAY TRIAL // Rumors of Qualcomm laying off thousands of people were abound in the media these days as they stated more than 4,000 jobs would be cut.
However, Qualcomm has officially announced that major structural reforms will be taking place inside the company with the sole aim of reducing spending by approximately $1.4 billion. Qualcomm expects this process to last until the end of the 2016 fiscal year.
The initiative to reduce costs is by implementing a number of targeted reductions that will not put the company and its development roadmap at risk . Headcount reductions, temporary workforce, "streamlining" the engineering organization, and cutting down the number of offices and reducing management bonuses and compensations.
To follow in ARM's success, Qualcomm wants to form its own technology licensing division that'll be named Qualcomm Technology Licensing (QTL). It's believed that such a move will help increase shareholders' values because licensing technology consistently earns big bucks and is an effective, tried and true, profitable department, while Qualcomm Technologies that sell the actual application processors for smartphone has a fierce competition from MediaTek.
Jobs will suffer for Qualcomm to fully financially redress itself
We believe that this move is an essential change Qualcomm needs to do in order to cut spending and keep their relationship with Samsung as tight as always. Qualcomm has recently cut ties with TSMC for its 20nm process technology dies as complaints from Samsung and other SnapDragon 810 users underlined an unpleasant heating of its SoCs and dramatic drop in performance. To rectify this issue, Samsung has offered to produce the next SnapDragon semiconductors themselves and make sure any fabrication issues will be eliminated.
The layoffs are bad news for about 4,500 employees who work for the company, meaning 15% of its entire workforce of its entire 31,000 full-time and temporary employees.
Qualcomm shares, down 21% over the past year, lost another 2% in after-hours trading after closing down 95 cents at $64.19 on Wednesday. Its profit declined 47% and revenue fell 14% in the June 28 quarter, both compared with the year-earlier period, so it’s no wonder that Qualcomm had a bloated headcount and worse financial result that its main competitor MediTek who has almost 4 times less employees than Qualcomm.