Chipmaker also facing new antitrust allegations
Qualcomm is reportedly weighing several options, including job cuts, to boost profits as it prepares to discuss its annual earnings.
One of the options could include job cuts, according to a report by The Information. The report, which cites unnamed sources, said the chipmaker could cut as much as 10% of its approximately 30,000 employees.
The sources say declining smartphone prices and increased competition from emerging Chinese vendors are the reasons for the potential downsizing.
This comes after earlier reports that Qualcomm is under pressure from its hedge fund partner, Jana Partners, to split its chip business and highly profitable patent-licensing business into separate entities. Jana Partners wrote a letter in mid-April that said Qualcomm’s chipset business is “essentially worthless” at current valuations.
“Prior reviews have concluded that the synergies provided by our business model create more value for stockholders than could be created through alternative corporate structures,” Qualcomm said in response to the news back in April. “We will continue to evaluate opportunities to enhance stockholder value and are committed to pursuing the right course of action for all of our stockholders.”
Another factor in the potential restructuring of the company is the steep fines that Qualcomm is facing with regard to several antitrust cases.
The European Commission just opened two antitrust investigations looking into Qualcomm’s sales practices in the baseband chipset market. Earlier this year, Qualcomm paid a $975 million fine to the Chinese government for antitrust issues.
Qualcomm said it is cooperating with the European investigations, but claims the allegations of predatory pricing are “without merit.”
In spite of all of this, Qualcomm remains the world leader in application processors for smartphones and baseband chipsets.
