In a press release, Qualcomm Incorporated has announced a Strategic Realignment Plan that is designed to "create a sustainable long-term value for stockholders."
The plan includes reducing its annual costs from its fiscal 2015 levels of $7.3 billion. The reduction will approximately amount to $1.4 billion, $1.1 billion of which includes reductions to its workforce, streamlining the engineering organization, reducing the number of existing offices and increasing resources in low-cost regions. The other $300 million will include the reduction in the annual share-based compensation grants.
Reuters reported that the number of full-time workers to be let go is approximately 4,500 or 15 percent of its workforce.
Steve Mollenkopf, CEO of Qualcomm, stated in the press release that the plan is "designed to drive meaningful change in the near-term," without compromising Qualcomm's ability to retain and build upon its position as a technology leader and to create long-term value to stockholders.
"We are making fundamental changes to position Qualcomm for improved execution, financial and operating performance," he said. "We are right-sizing our cost structure and focusing our investments around the highest return opportunities while reaffirming our intent to return significant capital to stockholders and refreshing our Board of Directors."
Qualcomm is also reviewing its corporate structure, which includes possible business separation alternatives, capital return opportunities and other potential strategic and financial alternatives to create stockholder value.
JANA Partners, a significant Qualcomm Stockholder, has been pushing for Qualcomm to spin-off its chip business from the company's highly profitable patent licensing income.
"We decided we were going to take a fresh look at the corporate structure of the company," Derek Aberle, Qualcomm's president said according to Reuters. "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."
Qualcomm, a maker of software and chips used for smartphones, tablet and gaming devices, is facing intense competition from Taiwan's MediaTek Inc and other Chinese companies that make chips for low-priced phones, according to Reuters.
The company is known for its Snapdragon processor used in high-end smartphones made by Samsung Electronics Co Ltd, HTC Corp. and ZTE Corp.
Qualcomm is expected to complete its review by the end of the year.
