Qualcomm Says Job Cuts Likely After Forecasting Lower 4th Quarter Sales
A Qualcomm trade show booth. REUTERS/Aly Song
San Diego-based Qualcomm forecast fourth-quarter sales below market expectations on Wednesday and said it would likely cut jobs as consumer spending on smartphones remained stubbornly weak amid slowing global economic growth.
Demand for consumer electronics has also been hampered by China’s slower-than-expected economic recovery. Smartphone shipments in the world’s second largest economy were down 5% in the June quarter, Canalys data showed.
Qualcomm said its forecast also takes into account the impact of the macroeconomic headwinds, weaker global handset units and channel inventory drawdown.
The company estimated fourth-quarter revenue of $8.1 billion to $8.9 billion, while analysts polled by Refinitiv expected $8.70 billion. Qualcomm forecast a fourth-quarter adjusted earnings range with a midpoint of $1.90, in line with analysts’ consensus estimate of $1.91 per share according to Refinitiv data.
Qualcomm warned of likely restructuring charges for job cuts.
“While we are in the process of developing our plans, we currently expect these actions to consist largely of workforce reductions, and in connection with any such actions we would expect to incur significant additional restructuring charge,” the company said in a securities filing.
Qualcomm shares fell nearly 3.3% in choppy extended trading.
At a conference in May, Qualcomm CEO Cristiano Amon said he had not seen signs of healthy consumption in China yet and the smartphone industry recovery was “a number of quarters out.”
Qualcomm rival MediaTek last week warned that phone manufacturers are “cautious” about buying chips due to tepid end-user demand.
Revenue at Qualcomm’s mainstay handset chip business fell 25% to $5.26 billion in the third quarter. Adjusted revenue of $8.44 billion missed estimates of $8.50 billion.
The company forecast adjusted fourth-quarter earnings per share of between $1.80 and $2, compared to estimates of $1.91.
The automotive sector was a bright spot as Qualcomm seeks to diversify beyond smartphone chips. Revenue from the sector grew 13% on the increasing use of computer chips in vehicles.
Source: Times of San Diego
