Qualcomm said it has started a round of layoffs, and according to a report from Bloomberg the action will eliminate a total of 1,500 jobs in California.
The news comes as Qualcomm struggles to close its much-delayed purchase of NXP while concurrently meeting its goal to cut costs by $1 billion.
Qualcomm confirmed that it is embarking on layoffs in a media statement: "As part of the cost reduction plan announced in January, Qualcomm is conducting a reduction of our full-time and temporary workforce,” the company said. “A workforce reduction, such as this one, affects not only those employees who are part of the reduction, but their families, co-workers and the community. We recognize this and have offered affected employees supportive severance packages to reduce the impact of this transition on them. We first evaluated non-headcount expense reductions, but we concluded that a workforce reduction is needed to support long-term growth and success, which will ultimately benefit all our stakeholders.”
The company didn’t provide details, but Bloomberg cited unnamed sources pegging the figure at 1,500 jobs in California; Qualcomm is based in San Diego.
Separately, in a release issued this morning, Qualcomm said that, at the request of the Ministry of Commerce in China, it refiled its application to acquire NXP, thus extending the “end date” of its NXP purchase agreement from April 25 to July 25. China is the only country that hasn’t signed off on Qualcomm’s purchase of NXP, which the company has described as a key piece of its strategy to expand into new markets as the smartphone industry cools.
Indeed, Qualcomm’s pursuit of NXP may well be tangled in the brewing trade war between China and the United States. The U.S. government has taken several recent actions against China and Chinese companies, and market observers believe China may stall on Qualcomm’s application to purchase NXP in retaliation.
A spokesperson for China’s Commerce Ministry told the Wall Street Journal that the agency would provide a fair review of Qualcomm’s NXP purchase, but noted that the process had turned up “related issues that are hard to resolve, making it difficult to eliminate the negative impact.”
Adding further troubles to Qualcomm's plate is a reported plan by Paul Jacobs—the son of the company's founder and a former CEO—to purchase Qualcomm and take it private.
Hanging over the issue is Qualcomm’s January pledge that it can generate long-term annual revenue growth of 6% to 8%, and that the company’s serviceable addressable market will grow by a factor of 6x from 2015 to 2020, to a total of $150 billion. Qualcomm said it would reach its lofty revenue and profit goals through a new $1 billion cost-reduction program, gains from its still-pending NXP acquisition, and the “resolution of current licensing disputes.” Qualcomm remains embroiled in a high-profile patent-licensing dispute with Apple.
Qualcomm’s stock dropped this morning to around $53 per share, from a previous close of around $55 per share.