In the face of dwindling demand for its core product, smartphone chip manufacturing giant Qualcomm Inc. QCOM has declared sizable job reductions.
What Happened: As reported by Bloomberg, Qualcomm will be laying off 1,258 employees, primarily in its San Diego and Santa Clara bases. The overall impact on its 50,000-strong workforce, however, has not been disclosed by the company.
Among the positions being cut, over 750 belong to the engineering departments of Qualcomm, with positions ranging from director to technician roles. The remaining layoffs will span across various departments such as internal technical staff and accounting, Bloomberg reports.
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These job reductions are scheduled to begin in mid-December, as stated in the company’s notifications to the California Employment Development Department.
Why It Matters: Qualcomm’s CFO, Akash Palkhiwala, had previously hinted at the likelihood of cost-cutting measures during an analyst call in August.
The chipmaker, which is set to announce its earnings next month, is predicted to witness a 19% contraction in its revenue for the current fiscal year. Despite CEO Cristiano Amon‘s efforts to diversify the product range, Qualcomm’s main revenue continues to be derived from the phone market, which has not rebounded as quickly as expected.
In response to the news, Qualcomm’s shares closed the session 0.3% higher. Year-to-date, the stock has seen a meager 1% growth, considerably lagging behind the VanEck Semiconductor ETF SMH which has rallied by nearly 47%.
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