American semiconductor giant Qualcomm is laying off roughly 1,250 employees as a part of its broader cost-cutting measures. The news follows CEO Akash Palkhiwala’s warnings from back in August that the company would “take proactive measures” against the backdrop of shrinking value.
According to the official filings, the layoffs are targeting two California offices in particular, affecting 1,064 San Diego employees and 194 Santa Clara employees. The cuts are expected to take place in the first half of December.
Key takeaways:
- Qualcomm, a major semiconductor company, is set to lay off approximately 1,250 employees as part of its cost-cutting measures.
- The job cuts will specifically impact two California offices, with 1,064 employees in San Diego and 194 in Santa Clara facing layoffs.
- This move contrasts with Qualcomm’s historical trend of expansion, witnessing an eightfold increase in its workforce from 6,000 in 1996 to 50,000 in 2022.
- Qualcomm’s recent financial report indicates a decline in earnings, with $2.02 earnings per share (EPS), down -33% from the previous year, and a -22% year-over-year decrease in revenue.
- Despite recent challenges, analysts anticipate a rebound in Qualcomm’s earnings per share, projecting an increase from $2.02 in Q4 2023 to $2.29 in Q1 2024.
The new wave of Qualcomm layoffs is targeting 1,250 California employees
The upcoming job cuts at Qualcomm (NASDAQ:QCOM) are coming after years of sustained expansion, with the chipmaker’s workforce increasing from 6,000 in 1996 to 50,000 in 2022. The decision to decrease the headcount comes amidst dwindling earnings.
The number of employees working at Qualcomm increased by 8x since 1996. Source: Stock Analysis
In the last financial report published on November 1, 2023, the company reported $2.02 earnings per share (EPS), down -33% from the previous year. In addition, revenue decreased by -22% year-over-year. While the company did see a major drop in revenue in 2023, its business results have been quite impressive over the past decade. The company increased its worldwide revenue from $19.1 billion in 2012 to a whopping $44.2 billion in 2022.
According to the comments made by Palkhiwala during the earnings call in August, the company is prepared to cut costs until they see “sustained signs of improving fundamentals.”
“Given our commitment to operating discipline, we will proactively implement additional cost actions. Until we see sustained signs of improving fundamentals, our operating framework does not assume an immediate recovery.”
The comments echo what the company published in the last earnings report, in which it highlighted “uncertainty in the macroeconomic and demand environment” as the main reasons for poor business performance. According to the report, the company expects cost-cutting measures to come primarily from “workforce reductions” and “restructuring actions”.
Analysts predict Qualcomm earnings to rebound in Q1 2024
The cost-cutting measures could yield immediate results, at least as far as analysts’ expectations for EPS go. Qualcomm’s earnings per share could increase from $2.02 in Q4 2023 to $2.29 in Q1 2024. While that would still come short of more than $3 per share earnings the company generated throughout 2022, it would be a nice rebound compared to the last two earnings reports from 2023.
Qualcomm’s earnings per share since 2021.
Meanwhile, the QCOM stock price is expected to take a beating in the first quarter of 2024. According to our QCOM price forecast, the stock could see a significant drop to $100.4 by mid-February 2024, which would represent about a -16.5% decrease compared to current market rates.
It is worth noting that Qualcomm is not the only company currently undergoing reductions in the workforce. Last month, Wells Fargo announced new layoffs as a part of its $10 billion cost-cutting plan. Meanwhile, tech giants like Meta and Google have cut over 150,000 jobs in 2022 and 2023.
Source: https://coincodex.com/article/34277/qualcomm-layoffs/