Qualcomm Plans Layoffs Amid Lower Financial Projections

In the latest update from Qualcomm, their Q3 2023 financial report, covering the period ending on June 25, 2023, indicates a notable decline in both revenue and net profit compared to the same period last year.

The company's outlook for the upcoming quarter suggests that sales might fall short of market expectations, potentially leading to workforce adjustments. This caution is linked to the global economic slowdown and sustained softness in consumer spending on items like smartphones and other electronic devices. Qualcomm's projections for the fourth quarter anticipate sales ranging between $8.1 billion and $8.9 billion, which is notably lower than the average analyst estimate of $8.79 billion.

This projection has raised concerns about the electronic components industry, particularly the smartphone sector, facing a significant downturn. Qualcomm and other chip manufacturers have observed a decline in orders from smartphone makers, causing an oversupply of inventory. During a recent conference call, Qualcomm's executives suggested that reduced spending on electronic components is likely to continue through the remainder of the year.

Cristiano Amon, CEO of Qualcomm, shared during the conference call, "Given the current uncertain environment, we are taking proactive steps to ensure Qualcomm remains resilient and continues to deliver value to our shareholders."

In the aftermath of the earnings announcement, Qualcomm's stock price experienced a decline of around 7% in after-hours trading.

The report also highlights that smartphone shipments for the current year are expected to drop by a high single-digit percentage compared to the previous year. This trend is partly due to slower demand in China, the world's largest smartphone market, which contributes significantly to Qualcomm's sales.

Qualcomm is taking strategic actions to manage expenses and invest in innovative products, particularly focusing on leveraging artificial intelligence in smartphones. Workforce reductions have already been initiated, with the company incurring $285 million in restructuring charges during the previous quarter, primarily related to severance costs. Further workforce adjustments are anticipated.

Qualcomm also disclosed plans for potential additional workforce actions, stating, "We are in the process of formulating these plans, and we expect that they will primarily involve workforce adjustments, with associated restructuring charges."