San Diego-based Qualcomm has confirmed the company plans to let go of 15 percent of its workforce as a part of a strategic realignment plan meant to save $1.4 billion.
In a plan laid out Wednesday, the company announced it would cuts its spending by cutting portions of its workforce, streamlining its engineering organization, increasing its mix of resources in lower-cost regions and reducing locations and invest in differentiated technology areas.
In its presentation, the company said it plans to cut 15 percent of its full-time workforce, but it is unclear where those employees are currently based. In addition to those numbers, the company says it will "significantly reduce" their temporary workforce headcount.
The San Diego-based wireless technology company has been under intense pressure recently from Jana Partners, a major shareholder, to make changes. The company is also adding two Jana Partner picks to its board of directors. A third director, selected by the company and approved by Jana, will be added soon.
“We are making fundamental changes to position Qualcomm for improved execution, financial and operating performance,” said Steve Mollenkopf, CEO of Qualcomm Incorporated, in a statement.
The plan will also eliminate $300 million in annual share-based compensation grants. The run-rate is expected to play out by the end of the 2016 fiscal year. Significant capital will return to stockholders as well.
San Diego analyst Steve Re with Quality Growth Management says it means Qualcomm, the biggest growth driver in San Diego, is on hold for a while, but not forever.
"If Qualcomm goes through this period successfully, and focuses harder on what builds success, they will be hiring again in the future," Re said. "But I would say for the next year, Qualcomm will not be a driver of the San Diego economy."
The company also reviewed whether the company should be split in two.
Qualcomm Inc.'s announcement comes as it reports a massive drop in third-quarter revenue and profit.
The Associated Press contributed to this report.
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