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Summary:

Qualcomm, facing some headwinds in its business, is looking to trim some fat, sources tell us. The company cut some VP level executives and many others in order to rein in expenses. Some details…

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Qualcomm, the mobile chip giant that eats competitors like Pac Man munches berries, is cleaning up its middle management ranks and is said to be making more cuts across the board in order to rein in expenses. These cuts have been going on for past few days, sources tell us.

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Qualcomm has lately been facing some heat from low-cost rivals like MediaTek. In addition, large smartphone makers such as Apple and Samsung are increasingly building their own silicon instead of leaning on the San Diego, California-based mobile chip behemoth. These challenges perhaps explain why the company reported a lukewarm fourth quarter of (fiscal) 2013 year and forecast more modest revenue growth than Wall Street was expecting.

In a conference call discussing the earnings with Wall Street analysts, CEO Dr. Paul Jacobs said:

“In fiscal 2014 we are facing some mix and demand factors which we currently expect will moderate our QCT growth. In light of this we are taking near-term actions company-wide to prioritize investments, stay focused on growth but also control expenses in order to deliver operating profit growth in excess of revenue growth.”

The company has cut several vice-president level executives and others have been demoted. One division saw nearly 100 jobs cut, we have learned, though the number of total cuts is still not final. There is likelihood of further layoffs as the cuts will be non-trivial, as one of our sources tells us. Another source close to the company said that with 31,000 employees, the company has to periodically streamline things and this is business as usual. The cuts are supposedly to cut fat and reduce the costs of the company, and calls to company’s public relations representatives went unanswered.

Qualcomm has been one of the drivers of the mobile internet revolution and has been able to position its chips to be widely used inside the new generation of smartphones. It also has diversified pretty aggressively into the business of making chips for connected devices and the Internet of Things.

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  1. Should ask them if they are still using all of their corporate jets. Just taking out one of those could have saved many jobs, not to mention OPEX. getting rid of people in growth areas will not help them save any significant OPEX but will have an enormous impact on top line growth. Should delve into where these cuts are actually taking place.

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  2. How does Qualcomm reconcile the pay rise it is giving it’s new CEO – Qualcomm New CEO Mollenkopf Gets Pay Raise, $50 Million in Stock (http://www.businessweek.com/news/2013-12-18/qualcomm-new-ceo-mollenkopf-gets-pay-raise-50-million-in-stock) with the layoffs announced to save costs?

    Something doesn’t seem right

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