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Let's stay focused on good quality and good output
-----Original Message-----
From: Richard Han [mailto:richardh@hanabk.th.com]
Sent: Thursday, July 23, 2015 10:34 AM
To: Richard Han
Subject: FW: (BN) Qualcomm to Cut Jobs, Review Structure as Sales Decline
(2)
Dear All
Seems may tech companies are having a tough time
WBR Richard
> Qualcomm to Cut Jobs, Review Structure as Sales Decline (2)
> 2015-07-22 23:47:21.471 GMT
>
>
> (Updates with CEO comment in 10th paragraph.)
>
> By Ian King
> (Bloomberg) -- Qualcomm Inc., seeking to appease investors after
> posting its worst sales decline since 2009, said it will cut its
> workforce by 15 percent and review strategic alternatives, including a
> breakup, as competition stiffens in the smartphone-chip market.
> The company plans to reduce costs by a total of $1.4 billion,
> including cutting executive pay, and will shake up its board,
> according to a statement Wednesday. The San Diego-based company also
> forecast fiscal fourth-quarter sales and profit that may fall short of
> analysts' estimates.
> Chief Executive Officer Steve Mollenkopf is conducting the largest
> job reduction in the company's history as its chip unit loses orders
> and the technology-licensing division suffers amid a consumer shift to
> cheaper smartphones. He's yielding to pressure from activist hedge
> fund Jana Partners LLC, which has been pushing for cost cuts,
> executive pay realignment and the return of more capital to investors.
> "It's undeniable they're losing share -- lots of it,"
> said Stacy Rasgon, an analyst at Sanford C. Bernstein & Co. He has the
> equivalent of a hold rating on the stock. "They've got to take cost
> out."
> The planned job cuts will amount to about 4,700 positions, based
> on the 31,300 employees the company reported having at the end of
> fiscal 2014.
> Qualcomm shares, down 14 percent this year, fell 1.6 percent in
> extended trading following the announcement. They had earlier lost 1.5
> percent to $64.19 at the close in New York.
>
> Board Changes
>
> As part of today's moves, Jana Partners agreed to some standstill
> provisions, including that it won't speak publicly about Qualcomm's
> plans, call shareholder meetings or increase its holdings in the
> chipmaker to more than 4 percent. Changes to the company's board
> include the retirement of Brent Scowcroft and Duane Nelles, while
> Donald Cruickshank won't seek re- election in 2016, and Raymond
> Dittamore won't stand for re- election in 2017, assuming he's elected
> in 2016, Qualcomm said.
> To replace them, Qualcomm is adding Mark McLaughlin, CEO of Palo
> Alto Networks Inc., and Tony Vinciquerra, a former executive of Fox
> Networks Group Inc., as part of the agreement with Jana. One other
> independent director, chosen by the company and approved by Jana, will
> be added soon. Qualcomm also reiterated its commitment to return at
> least 75 percent of the cash it generates to shareholders through
> dividends and buybacks, in addition to a previously announced $10
> billion share-repurchase program to be completed by March 2016.
> Qualcomm has more than doubled sales since 2010 and it's added
> staff at almost the same rate. The company has grown from
> 17,500 employees at the end of 2010, according to data compiled by
> Bloomberg.
>
> 'Optimize' Spending
>
> "We had tremendous growth in both our business and employee base
> over the last several years," Mollenkopf said in an interview. "It's
> typical in a situation like that to have an opportunity to have a look
> at that and say maybe we can optimize the way in which we're
> spending."
> The company isn't backing off on investing in new products and
> will continue to spend about $4 billion a year on research and
> development, he said. It's paring investment by concentrating only on
> areas, such as processors for server chips, that provide a major
> opportunity to grow, Mollenkopf said.
> In the third quarter, which ended June 28, Qualcomm's net income
> fell to $1.2 billion, or 73 cents a share. Sales slid 14 percent to
> $5.8 billion, the steepest drop since a 19 percent decline in the
> fourth quarter of 2009, when chipmakers were reeling from a worldwide
> financial crisis that curbed consumer spending on technology.
>
> Smartphone Makers
>
> The company said the high-end processors and modems it sells are
> being hurt by shifts in the phone market. While Qualcomm doesn't name
> specific customers, it said the lucrative high end of the business is
> increasingly becoming the preserve of just two companies. The two
> biggest makers of smartphones are Samsung Electronics Co. and Apple
> Inc., and Samsung has started using its own chips in its Galaxy range.
> Apple uses its own processors alongside a Qualcomm modem in iPhones.
> "Up until very recently Qualcomm was a very secure franchise that
> was able to just invest at will because they were so strong," said
> Suji De Silva, an analyst at Topeka Capital Markets Inc. He has a hold
> rating on the stock. "There are people now beginning to be able to
> service the market that they had to themselves."
> Excluding certain costs, third-quarter profit was 99 cents a
> share, Qualcomm said. Analysts on average had projected profit of 95
> cents on sales of $5.84 billion.
> Net income in the current period will be 51 cents to 76 cents a
> share on revenue of $4.7 billion to $5.7 billion, Qualcomm said. On
> average, analysts had estimated earnings of 95 cents on sales of $6.13
> billion, according to data compiled by Bloomberg.
>
> Growth Stalls
>
> Qualcomm has averaged more than 20 percent annual sales growth
> since 2010 after being the first to offer chips that connect phones to
> the fastest data networks using a standard called long term evolution,
> or LTE. Now, other companies such as South Korea's Samsung and
> Taiwan's MediaTek Inc. are beginning to erode its dominance.
> In the first three months of the year, these companies were able
> to grab a combined 19 percent of the market, according researcher to
> Strategy Analytics. Qualcomm's loss of orders -- particularly those
> from Samsung's phone unit -- has wiped out year-over-year sales growth
> that had stretched back 19 quarters.
>
> Reviewing Split
>
> Qualcomm said it has bowed to pressure to reconsider splitting up
> its two main business units, one that designs chips and one that
> collects patent-license fees on smartphones. The company has looked
> into such a division in the past as regulators and other companies
> sought to challenge a business model where the majority of profit
> comes from royalties and the largest portion of revenue from chip
> sales.
> "We're just taking a fresh look," said Mollenkopf, who has
> previously argued that the two units complement each other.
> Such a division could deprive the chip-design business of cash for
> research and development, and might potentially starve the patent unit
> of new inventions made by its engineers. A split along those lines
> would make sense if it was part of a transaction where one of the
> businesses was sold or combined with another company, said Bernstein's
> Rasgon.
> "It kind of destroys the company in its current form," he said. "A
> split as a precursor to something else might have some value."
>
FYI.............. we are glad to be part of Hana at this time..... Let's stay focused on good quality and good output-----Original Message-----From: Richard Han [mailto:richardh@hanabk.th.com]Sent: Thursday, July 23, 2015 10:34 AMTo: Richard Han Subject: FW: (BN) Qualcomm to Cut Jobs, Review Structure as Sales Decline(2)Dear AllSeems may tech companies are having a tough timeWBR Richard > Qualcomm to Cut Jobs, Review Structure as Sales Decline (2)> 2015-07-22 23:47:21.471 GMT> > > (Updates with CEO comment in 10th paragraph.)> > By Ian King> (Bloomberg) -- Qualcomm Inc., seeking to appease investors after > posting its worst sales decline since 2009, said it will cut its > workforce by 15 percent and review strategic alternatives, including a > breakup, as competition stiffens in the smartphone-chip market.> The company plans to reduce costs by a total of $1.4 billion, > including cutting executive pay, and will shake up its board, > according to a statement Wednesday. The San Diego-based company also > forecast fiscal fourth-quarter sales and profit that may fall short of > analysts' estimates.> Chief Executive Officer Steve Mollenkopf is conducting the largest > job reduction in the company's history as its chip unit loses orders > and the technology-licensing division suffers amid a consumer shift to > cheaper smartphones. He's yielding to pressure from activist hedge > fund Jana Partners LLC, which has been pushing for cost cuts, > executive pay realignment and the return of more capital to investors.> "It's undeniable they're losing share -- lots of it,"> said Stacy Rasgon, an analyst at Sanford C. Bernstein & Co. He has the > equivalent of a hold rating on the stock. "They've got to take cost > out."> The planned job cuts will amount to about 4,700 positions, based > on the 31,300 employees the company reported having at the end of > fiscal 2014.> Qualcomm shares, down 14 percent this year, fell 1.6 percent in > extended trading following the announcement. They had earlier lost 1.5 > percent to $64.19 at the close in New York.> > Board Changes> > As part of today's moves, Jana Partners agreed to some standstill > provisions, including that it won't speak publicly about Qualcomm's > plans, call shareholder meetings or increase its holdings in the > chipmaker to more than 4 percent. Changes to the company's board > include the retirement of Brent Scowcroft and Duane Nelles, while > Donald Cruickshank won't seek re- election in 2016, and Raymond > Dittamore won't stand for re- election in 2017, assuming he's elected > in 2016, Qualcomm said.> To replace them, Qualcomm is adding Mark McLaughlin, CEO of Palo > Alto Networks Inc., and Tony Vinciquerra, a former executive of Fox > Networks Group Inc., as part of the agreement with Jana. One other > independent director, chosen by the company and approved by Jana, will > be added soon. Qualcomm also reiterated its commitment to return at > least 75 percent of the cash it generates to shareholders through > dividends and buybacks, in addition to a previously announced $10 > billion share-repurchase program to be completed by March 2016.> Qualcomm has more than doubled sales since 2010 and it's added > staff at almost the same rate. The company has grown from> 17,500 employees at the end of 2010, according to data compiled by > Bloomberg.> > 'Optimize' Spending> > "We had tremendous growth in both our business and employee base > over the last several years," Mollenkopf said in an interview. "It's > typical in a situation like that to have an opportunity to have a look > at that and say maybe we can optimize the way in which we're > spending."> The company isn't backing off on investing in new products and > will continue to spend about $4 billion a year on research and > development, he said. It's paring investment by concentrating only on > areas, such as processors for server chips, that provide a major > opportunity to grow, Mollenkopf said.> In the third quarter, which ended June 28, Qualcomm's net income > fell to $1.2 billion, or 73 cents a share. Sales slid 14 percent to> $5.8 billion, the steepest drop since a 19 percent decline in the > fourth quarter of 2009, when chipmakers were reeling from a worldwide > financial crisis that curbed consumer spending on technology.> > Smartphone Makers> > The company said the high-end processors and modems it sells are > being hurt by shifts in the phone market. While Qualcomm doesn't name > specific customers, it said the lucrative high end of the business is > increasingly becoming the preserve of just two companies. The two > biggest makers of smartphones are Samsung Electronics Co. and Apple > Inc., and Samsung has started using its own chips in its Galaxy range.> Apple uses its own processors alongside a Qualcomm modem in iPhones.> "Up until very recently Qualcomm was a very secure franchise that > was able to just invest at will because they were so strong," said > Suji De Silva, an analyst at Topeka Capital Markets Inc. He has a hold > rating on the stock. "There are people now beginning to be able to > service the market that they had to themselves."> Excluding certain costs, third-quarter profit was 99 cents a > share, Qualcomm said. Analysts on average had projected profit of 95 > cents on sales of $5.84 billion.> Net income in the current period will be 51 cents to 76 cents a > share on revenue of $4.7 billion to $5.7 billion, Qualcomm said. On > average, analysts had estimated earnings of 95 cents on sales of $6.13 > billion, according to data compiled by Bloomberg.> > Growth Stalls> > Qualcomm has averaged more than 20 percent annual sales growth > since 2010 after being the first to offer chips that connect phones to > the fastest data networks using a standard called long term evolution, > or LTE. Now, other companies such as South Korea's Samsung and > Taiwan's MediaTek Inc. are beginning to erode its dominance.> In the first three months of the year, these companies were able > to grab a combined 19 percent of the market, according researcher to > Strategy Analytics. Qualcomm's loss of orders -- particularly those > from Samsung's phone unit -- has wiped out year-over-year sales growth > that had stretched back 19 quarters.> > Reviewing Split> > Qualcomm said it has bowed to pressure to reconsider splitting up > its two main business units, one that designs chips and one that > collects patent-license fees on smartphones. The company has looked > into such a division in the past as regulators and other companies > sought to challenge a business model where the majority of profit > comes from royalties and the largest portion of revenue from chip > sales.> "We're just taking a fresh look," said Mollenkopf, who has > previously argued that the two units complement each other.> Such a division could deprive the chip-design business of cash for > research and development, and might potentially starve the patent unit > of new inventions made by its engineers. A split along those lines > would make sense if it was part of a transaction where one of the > businesses was sold or combined with another company, said Bernstein's > Rasgon.> "It kind of destroys the company in its current form," he said. "A > split as a precursor to something else might have some value.">
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