Qualcomm Restructuring, Cutting Jobs to Bolster Bottom Line

 
 
By Jeffrey Burt  |  Posted 2015-07-24
 
 
 
 
 
 
 
 
 
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    1 - Qualcomm Restructuring, Cutting Jobs to Bolster Bottom Line
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    Qualcomm Restructuring, Cutting Jobs to Bolster Bottom Line

    We look at Qualcomm's restructuring plans—including job cuts, a reworking of the board of directors and other efforts to boost the company's bottom line.
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    2 - Thriving in a Rapidly Changing Market
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    Thriving in a Rapidly Changing Market

    CEO Mollenkopf said the "steps are being implemented on an accelerated timeline and are designed to help us improve execution, enhance financial performance, and drive more profitable growth across the company without jeopardizing our ability to retain and build upon our technology leadership position in both our core and new businesses."
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    3 - The Need to Cut Costs
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    The Need to Cut Costs

    Mollenkopf said Qualcomm is making moves to save $1.4 billion in annual expenses while not damaging the company's innovation. Qualcomm will continue to invest $4 billion a year in R&D.
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    4 - Slashing the Workforce
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    Slashing the Workforce

    The proposal to cut 15 percent of the jobs at Qualcomm—which amounts to about 4,600 positions—caught much of the attention when the changes were announced. As part of the cost-reduction plan, Qualcomm also is reducing share-based compensation by about $300 million.
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    5 - Job Cuts Not the Only Way to Save
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    Job Cuts Not the Only Way to Save

    Mollenkopf said the company also will shed some facilities and look to offshore some work to lower-cost regions.
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    6 - New Way to Reward Executives
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    New Way to Reward Executives

    Qualcomm is adding a returns-based metric to its performance-based equity awards as part of a restructuring of how executives' annual cash bonuses are determined.
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    7 - Changing of the Board
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    Changing of the Board

    The company is making changes to its board of directors, adding two new members—as part of an agreement with Jana Partners—and saying good-bye to three others. Qualcomm also will appoint another member to the board, with input from Jana, which holds about $2 billion in Qualcomm stock.
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    8 - The New Board Members
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    The New Board Members

    One of the new board members is Mark McLaughlin, chairman, president and CEO of Palo Alto Networks. The other is Tony Vinciquerra, who was a director at Motorola when the company in 2011 decided to split its mobile phone business from its professional tech business.
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    9 - A Qualcomm Split on the Horizon?
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    A Qualcomm Split on the Horizon?

    Vinciquerra's experience with Motorola is interesting because Jana Partners has been pressing Qualcomm to separate its chip business from its patent-licensing unit. Mollenkopf said Qualcomm officials are reviewing the company's options, which could include a breakup, though no decisions will be made until later this year.
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    10 - Shareholders Will Be Happy
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    Shareholders Will Be Happy

    Qualcomm in the previous months already had made moves to give more money back to investors. Mollenkopf said the company wants to get to the point where it is returning 75 percent of its free cash to shareholders.
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    11 - Looking at Growth Areas
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    Looking at Growth Areas

    Qualcomm will continue innovating on mobile chips, but it also will look at other areas where its technology can be used, including small cells, the data center and the Internet of things, the CEO said.
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    12 - Limiting Outside Technology Investments
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    Limiting Outside Technology Investments

    The company is cutting back on spending money outside its chip and licensing businesses, including in such areas as displays.
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    13 - Return of the Custom Core
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    Return of the Custom Core

    With the Snapdragon 810, Qualcomm licensed an off-the-shelf ARM core in order to get the 64-bit chip out quickly and ramp up adoption. However, Samsung turned the chip down, reportedly worried about heating problems. Company officials earlier this year said they would base the upcoming Snapdragon 820 on its own custom core.
 

Qualcomm started the year off on a down note when Samsung decided not to use the chip maker's new Snapdragon 10 system-on-a-chip (SoC) in its upcoming Galaxy S6 smartphone. That, combined with the dominance of Samsung and Apple of the high-end premium smartphone market—which Qualcomm executives say is more than 80 percent, limiting Qualcomm's access to that space—has helped put a squeeze on the chip maker's revenues. That and pressure from investor Jana Partners to return more to shareholders has fueled speculation over the past few months about what moves Qualcomm officials might make to shore up its business. CEO Steve Mollenkopf this week began laying out what will be a significant restructuring of the company, which will include job cuts, a reworking of the board of directors, changes in executive compensation and the continuation of a review of the business that could lead to breaking the company in two. Mollenkopf said the moves are necessary to deal with a dynamic market, but Patrick Moorhead, principal analyst with Moor Insights and Strategy, worries the changes are an overreaction to demands made by a single shareholder. This eWEEK slide show takes a look at Qualcomm's moves.

 
 
 
 
 
 
 
 
 
 
 

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