Qualcomm plans layoffs




Qualcomm Corp., responding to the demands of activist investor Jana Partners LLC, will cut 15% of its workforce and reduce temporary staff,

the

Wall Street Journal

reported.

Jana owns a stake of more than $2 billion in Qualcomm, the article said.


The restructuring will include $300 million in cuts to the company's annual share compensation grants to employees, the


Journal


article said.


The company announced it would add Mark McLaughlin, CEO of Palo Alto Networks Inc., and Tony Vinciquerra, a senior adviser to private equity firm TPG, to its board. Qualcomm also plans to add a third director approved by Jana, the


Journal


reported.


Qualcomm also said it would consider separating its chip design business from its patent licensing business.

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The company's profit declined 47% and revenue dropped 14% in the quarter ended June 28 compared with the results from a year earlier, the


Journal


article said.


“Jana Partners disclosed its stake back in April and began pressuring Qualcomm to cut costs, add more independent board members, and consider a breakup, much to the board's dismay,”





Fortune




reported.

“Qualcomm instituted a share buyback program, but Jana wasn't mollified, and Qualcomm is clearly attempting to appease the fund with the cost cutting, the strategic review and by adding board members.”


The


Fortune


article added that “analysts outside the financial world were a bit taken aback by the tenor of the cuts and questions that were asked of Qualcomm's management” at the company's analyst conference call. Patrick Moorehead, president of Moor Insights and Strategy, told


Fortune:


“Listening to the conference call, you would think it was a company losing lots of money. Qualcomm is widely profitable and all this comes off as a response to activist investors, potentially an over-reaction.” (Sources:


Wall Street Journal


, July 22, 2015;


Fortune


, July 23, 2015.)

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