1Qualcomm 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.
2Thriving 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.”
3The 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.
4Slashing 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.
5Job 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.
6New 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.
7Changing 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.
8The 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.
9A 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.
10Shareholders 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.
11Looking 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.
12Limiting Outside Technology Investments
The company is cutting back on spending money outside its chip and licensing businesses, including in such areas as displays.
13Return 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.