23/07/2015
Qualcomm slashes jobs, says may split itself up
Chipmaker Qualcomm Inc said it may break itself up as it delivered its third profit warning this year and announced plans to slash jobs and spending in the face of rising competition.
The company said it would reduce costs by about $1.4 billion, cut about 4,500 full-time staff, or 15% of its workforce, and boost capital returns to shareholders.
Qualcomm shares fell 1.8% to $63.05 in after-market trading on Wednesday. The stock has lost a fifth of its value in a year.
The move comes after hedge fund Jana Partners called for Qualcomm to spin off its chip business from its highly profitable patent-licensing income, among other changes the activist asked for.
"We decided we were going to take a fresh look at the corporate structure of the company," Qualcomm president Derek Aberle said in an interview, adding that the chipmaker has reviewed its options twice already in the past decade.
"The environment is constantly changing so the analysis done earlier may not be valid anymore, so it's in that context that we're taking a look at it again now," Aberle said.
The company said it expected to complete its strategic review by the end of the year and also agreed to add three new board members in cooperation with the activist.
For the review, Qualcomm is being advised by investment banks Goldman Sachs Group Inc (GS.N) and Evercore Partners Inc (EVR.N), according to people familiar with the matter.
Qualcomm's Aberle added that M&A in the semiconductor industry is at a "heightened level."
Semiconductor dealmaking has reached $79.7 billion so far this year, the highest level since 2000.