Qualcomm, Stung by Sluggish Smartphone Market, Plans Layoffs
Company misses forecasts in quarterly earnings and gives muted outlook Qualcomm estimates that handset sales this year will be down by at least a high-single-digit percentage. Photo: ALY SONG/REUTERS By Asa Fitch Aug. 2, 2023 6:23 pm ET Qualcomm’s stock fell Wednesday after the maker of mobile-phone chips reported disappointing sales and said it expects a new round of layoffs. Qualcomm, which makes chips that go into Apple’s iPhones and millions of Android handsets, has been seeking growth in new areas amid a decline in its core mobile-phone chip business. Smartphone sales surged during the pandemic, but have stagnated in recent quarters, including a 7.8% year-on-year fall in the second quarter, according to International Data Corp. Qualcomm on
Qualcomm estimates that handset sales this year will be down by at least a high-single-digit percentage.
Photo: ALY SONG/REUTERS
Qualcomm’s stock fell Wednesday after the maker of mobile-phone chips reported disappointing sales and said it expects a new round of layoffs.
Qualcomm, which makes chips that go into Apple’s iPhones and millions of Android handsets, has been seeking growth in new areas amid a decline in its core mobile-phone chip business. Smartphone sales surged during the pandemic, but have stagnated in recent quarters, including a 7.8% year-on-year fall in the second quarter, according to International Data Corp.
Qualcomm on Wednesday said revenue from chips for handsets was $5.26 billion in the latest quarter, a 25% fall compared with the same period last year and below analysts’ expectations in a FactSet survey.
The company’s shares dropped more than 7.5% in after-hours trading Wednesday.
Qualcomm estimated in a presentation Wednesday that handset sales this year would be down by at least a high-single-digit percentage, which it attributed to a weaker global economy and slow recovery in China.
Against that backdrop, Qualcomm Chief Executive Cristiano Amon said in a call with analysts that the company would further cut costs. In a regulatory filing, it said that would consist largely of layoffs, but it didn’t specify how many jobs would be affected. Qualcomm, which had around 51,000 employees as of last September, has previously made layoffs during the downturn.
“Until we see sustained signs of improving fundamentals, our operating framework does not assume an immediate recovery,” Chief Financial Officer Akash Palkhiwala said, adding that the cost-cutting measures would continue into the company’s next fiscal year.
Overall, Qualcomm’s sales fell 23% to $8.45 billion, below Wall Street estimates. Its profit fell by more than half to $1.8 billion.
The midpoint of Qualcomm’s revenue outlook for the current quarter of between $8.1 billion and $8.9 billion also was behind forecasts.
Qualcomm’s muted quarter comes amid a broad-based recovery in PCs that helped lift second-quarter sales for chip-making giant Intel and its rival, Advanced Micro Devices, which reported results in recent days.
Write to Asa Fitch at [email protected]
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