While it was successful in beating off Broadcom’s unwanted approach, earlier this year, it was forced to offer shareholders a $1billion cost reduction programme as part of that defence. That pledge was made in a letter to investors as the company's board of directors battled Broadcom’s hostile bid and the implications of that offer are now becoming apparent.
The company has said that it is making the redundancies to support long-term growth and its future ‘success’. The layoffs should be seen as beneficial to shareholders.
The news comes at a difficult time for Qualcomm and came after the US Commerce Department imposed a seven-year ban preventing Qualcomm and other U.S. chip suppliers from selling products to Chinese company ZTE. The company is accused of violating the terms of a deal reached last year when it was found to be shipping telecom equipment to both Iran and North Korea.
ZTE accounts for $500million in sales for Qualcomm, according to industry analysts, and while the company will not confirm how much revenue is generated from sales to the Chinese company, it’s not insignificant.
Qualcomm also remains in a licensing battle with Apple and its takeover of NXP is still awaiting Chinese approval – and it’s not looking good. The authorities in China are now talking of “related issues that are hard to resolve, making it difficult to eliminate a negative impact,” essentially pouring a bucket of cold sick on the proposed deal.
'When sorrows come, they come not single spies, but in battalions'!