Qualcomm to Cut 15 Percent of Jobs, Considers Breakup

By Jeffrey Burt  |  Posted 2015-07-22 Print this article Print
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Mollenkopf said no decision has been made regarding a breakup, but the company did make some changes to the board of directors, bringing two new members on board, announcing the departures of others and promising to appoint another independent director with Jana's input.

"I think it's time to take a fresh look, and I think that's what we're describing," Mollenkopf said. "There's no foregone conclusion either way here, but we want to make sure we're doing a thorough look to make sure that we're looking at all ways to drive shareholder value."

The company has had other struggles, including antitrust investigations in such areas as the United States, China, South Korea and, most recently, the European Union.

In addition, Qualcomm is dealing with a changing smartphone market that includes both a block of the premium space dominated by two vendors, an unpredictable China market and falling average prices. In May, IDC analysts said they expect smartphone shipments worldwide will grow 11.3 percent in 2015, a drop from the 27.6 percent growth in 2014.

Patrick Moorhead, principal analyst with Moor Insights and Strategy, said the moves by Qualcomm executives amount to an overreaction to the demands of a single shareholder, Jana Partners.

"I think they have things they need to do to remain competitive … but I don't think they need to talk about potentially breaking up the company," Moorhead told eWEEK.

The company's problems started when Apple unveiled a 64-bit mobile processor for its iPhones, he said. Qualcomm at the time answered by rolling out 64-bit SoCs that used ARM's cores rather than its own. Qualcomm officials have said they will return to custom cores for its upcoming Snapdragon 820.

"If they hadn't lost Samsung, we wouldn't be having this conversation," Moorhead said.

The problem with what Qualcomm officials are talking about is that while the moves may be good for shareholders, there's no indication how they will ensure that Qualcomm chips make their way into new high-end devices from Samsung or other OEMs, he said.


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