Qualcomm To Cut 15% Of Workforce After Weak Earnings In Q3: To Consider A Restructuring Of Its Operations

Qualcomm, the San Diego based chip designer would cut costs after accounting a nearly 50 percent drop in quarterly profits. Following the poor financial performance in the third quarter of 2015, the company is going to lay off 15 percent of its workforce. The company has 31,300 full-time and temporary employees around the world and nearly half are based in San Diego. The layoffs could impact all business sectors.

As reported by CNN, the company decided to lay off more than 4500 workers as its revenues fell 14 percent and that its profit was down 47 percent as compared to last year. The market for Qualcomm’s products has contracted ever since Samsung began making chips for its Galaxy S6 in house. Analysts view severe competition from Apple's iPhone, regulatory issues in China and losing a key chip for Samsung’s most popular smartphone are the main reasons behind this crisis.

According to The San Diego Union Tribune, after the downsizing, Qualcomm will be able to cut $1.4 billion from its $7.3 billion in annual expenses. Earlier the company granted restricted stock to many of its employees and executives. This budget narrowing will also include a $300 million reduction in annual share-based compensation.

Chief Executive Steve Mollenkopf told analysts of The Wall Street Journal, that Qualcomm would conduct a comprehensive review of its operations and now focus on “any and all ways to maximize shareholder value.” He also mentioned that the company will also take a fresh look at potential breakup options. Qualcomm, the world’s biggest supplier of chips used in smartphones, is also to consider a restructuring of its operations by separating its design and patent-licensing business. The company additionally announced that it added two new board members, Mark McLaughlin, chief executive of Palo Alto Networks Inc. and Tony Vinciquerra, a senior adviser to private-equity firm TPG Qualcomm also plans to nominate a third director as well.

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