Qualcomm net profits slide 47% in Q2, job cuts coming up

Qualcomm net profits slide 47  in Q2, job cuts coming up

Qualcomm seemed to be on the path to become the ubiquitous chip maker for smartphones, the Intel of the ARM smartphone world, but then something happened. It’s hard to nail down what disrupted the success of Qualcomm’s Snapdragon chips, but it seems that Apple’s launch of the first 64-bit chips started a transition that has not ended up all that well.

Qualcomm has now reported a 47% drop in net profits in the second quarter of 2015 (third fiscal quarter for Qualcomm). The net income of the company now stands at $1.2 billion, a slide from the $2.2 billion it recorded in Q2 2014. Total revenue amounted to $5.8 billion in Q2 2015, down 14% from the $6.9 billion income recorded in the same period last year.

Shipments of the MSM series of chips (used mostly in smartphones) were actually flat at 225 million units, but it seems that the company now makes less money from that business.

Qualcomm fiscal Q3 financial results, in billion USD

Qualcomm fiscal Q3 financial results, in billion USD


Qualcomm has lost 20% of its market value in the last year, and now, it’s announcing some big job cuts: the company will lay off 15% of its workforce in a major restructuring aiming to cut expenses. The job cuts are planned to take place until the end of fiscal 2016 and should result in annual savings of $1.1 billion. Additionally, Qualcomm will cut share-based compensation by $300 million, for a grand total of $1.4 billion in savings.

Activist Qualcomm investors have been pushing for the company to split its consistently profitable licensing operations and its not so consistently successful chip making division, and that is another option that seems to be on the table, but no official news about this are announced so far.

As to the future of Qualcomm chips, we expect to see the custom 64-bit Qualcomm 'Kryo' core made using the non-planar FinFET architecture in consumer devices in the beginning of 2016, meaning that Qualcomm could have no true 'hero' device with a Snapdragon chip in the busy Holiday season (a few devices with Snapdragon chips are coming up, but the high-profile Galaxy Note is expected to ship with a Samsung Exynos chip). On the low end of the spectrum, we are seeing Chinese vendors adopt MediaTek chips en masse, and it's a segment where Qualcomm has to play catch up. It's worth remembering that Qualcomm was fined $975 million in China for violating anti-monopoly laws, and a similar investigation is underway in Europe.

source: Qualcomm

FEATURED VIDEO

23 Comments

1. Firestorm

Posts: 44; Member since: Jun 27, 2015

'If ' dragon 820 overheat 'then' Rip Qualcomm...

7. Well-Manicured-Man

Posts: 663; Member since: Jun 16, 2015

It is incredible what an influence Apple has on the industry. One swift and surprising move from Apple and a massive earthquake shakes the complete industry making former dominant players questioning their existence. Lets be honest, the situation in which Qualcomm is in right now is a direct result from Apple's A7 CPU.

11. AnTuTu

Posts: 1592; Member since: Oct 14, 2012

It's nothing to do with Apple. Qualcomm just been lazy. It is time for them to step up their game and improve relationships with other market leaders in the same space. You are really not a Well-Manicured-Man.

19. guest

Posts: 370; Member since: Jun 13, 2012

"Qualcomm seemed to be on the path to become the ubiquitous chip maker for smartphones, the Intel of the ARM smartphone world." Uh no Intel chips don't overheat and then have to be throttled. Intel will soon be Intel of the smartphone world.

23. Well-Manicured-Man

Posts: 663; Member since: Jun 16, 2015

Correct me if I am wrong, but Qualcomm's problems started when they wanted to go 64 bit. This shift in industry was initiated by Apple.

12. Ordinary

Posts: 2454; Member since: Apr 23, 2015

You are delusional if you think thats cause of A7.

16. Cheezwiz

Posts: 499; Member since: Dec 29, 2014

Um, no. It's every bit as much to do with Samsung which has gone solo with the Exynos.

22. JunitoNH

Posts: 1946; Member since: Feb 15, 2012

Funny comment of the day.

17. PhoneCritic

Posts: 1345; Member since: Oct 05, 2011

Not really. We have seen this before where QC was caught off guard when Nvida came from out of the blue with dual core processing (Tegra SoC) and QC had its back to the wall and had to go back to the drawing board and response a year and a half later with it's first dual core SoC. QC IMHO is a company that management seems to be lazy and not really conducting RD that well. QC always seems to get leap frog in the SoC sector.

2. Kruze

Posts: 1285; Member since: Dec 30, 2014

Qualcomm deserved it, I pity the staffs.

9. vincelongman

Posts: 5627; Member since: Feb 10, 2013

Yep, Qualcomm has been "lazy" ever since the 800 Apple, Samsung, Intel, Nvidia and MediaTek have all been making much more progress Hopefully next year we see more flagships with non Qualcomm SoCs

3. TheGunnyPT

Posts: 252; Member since: Feb 12, 2015

There's no amount of PR or Marketing that can make forget on people's minds that a 810 would overheat on simple tasks like opening a camera on a Z3V. Or overheating like a frying pan on a M9... You better hope the throttle works on One Plus 2, or you gonna get a lot more people angry as well. Don't fail us with 820, take 805 or 801 as a reference.. You're digging your own grave and Sammy shown you that it doesn't need you.. One day we all wake up surprised that major OEM made a deal with Sammy and they start using Exynos on their flagships, and that's the day the dragon will be slain.. Because they thought competition couldn't beat them.

6. GreekGeek

Posts: 1276; Member since: Mar 22, 2014

But the OnePlus PR team is trying too hard ..... gotta give mad props to them though lol

8. TheGunnyPT

Posts: 252; Member since: Feb 12, 2015

True, but we all know either they cripple the CPU or it will overheat..

4. Onami

Posts: 16; Member since: Mar 29, 2014

Dragon slayer 810/820 -> Rip Dragon Seriously I think They need to focus on selling the 801/805 and 808 with cheaper price now is better than go around w the 810/820, leave the high-end for SS if you cant and battle with mediatek now before you lose both the market.

5. GreekGeek

Posts: 1276; Member since: Mar 22, 2014

Kinda reminds me when Intel released a half-arsed cpu, I think it was Pentium 4, many people got angry then AMD seized the opportunity but it didn't take too long before Intel took the crown again....We might see MEDIATEK taking over soon.... I hope Qualcomm learned their lesson, they paid the price of slacking too much...

10. jove39

Posts: 2140; Member since: Oct 18, 2011

Qualcomm will be up for sale in next few years...they are on same path as HTC.

15. Augustine

Posts: 1043; Member since: Sep 28, 2013

Nay, as Broadcom.

13. medtxa

Posts: 1655; Member since: Jun 02, 2014

This is reason why manufacture still use 810. What can they do without qualcomm?

14. Augustine

Posts: 1043; Member since: Sep 28, 2013

This is the semiconductor industry: you rest on your laurels and, in the blink of an eye, an eager competitor eats your business up. The bean counters reveled at the cash in the bank, billions, instead of investing in R&D, taking risks to create the technology of the future and to remain at the top of its game. QCOM has been dominated by bean counters and lawyers for too long. So, those investors want to split it up? QTL licenses the technology created by QCT in the past, most of it related to CDMA and WCDMA. Since LTE and 5G was and is being designed from the ground up to avoid a company to dominate the related IP, QTL will have a decreasing income and, without QCT to add new IP to its portfolio, it'll quickly become merely a patent troll and go the way of others like it, such as SCO. QCOM has ceased to be a technology company a decade ago, when it's become a willing beach of fund managers.

18. PhoneCritic

Posts: 1345; Member since: Oct 05, 2011

QCOM has been dominated by bean counters and lawyers for too long. So, those investors want to split it up? QTL licenses the technology created by QCT in the past, most of it related to CDMA and WCDMA. Since LTE and 5G was and is being designed from the ground up to avoid a company to dominate the related IP, QTL will have a decreasing income and, without QCT to add new IP to its portfolio, it'll quickly become merely a patent troll and go the way of others like it, such as SCO. QCOM has ceased to be a technology company a decade ago, when it's become a willing beach of fund managers. Could not agree more!!! Especially the last line - You hit the nail right on the Head

21. almostdone

Posts: 425; Member since: Sep 25, 2012

When Samsung used their own Exynos processors obviously this will heavily impact on Qualcomm. Losing tens of millions of sales to the s6 / s6 edge alone is already crippling. Lets estimate there to be 20m shipments of s6 / s6 edge. If Qualcomm was to sell their latest snapdragon cpu to Samsung for $50. That is already 1$ billion lost. I'm guessing here but as you can see from this example of the impact caused. Not to mention other vendors who decided not to use snapdragons due to their overheating issues.

24. oozz009

Posts: 520; Member since: Jun 22, 2015

First they fail to quickly release a 64-bit processor like Apple did in late 2013 with the A7 and then they release a snapdragon 810 processor that causes smartphones to overheat (such as the xperia Z3+), causing Samsung to go with it's exynos chip instead (losing a major client) and now Qualcomm is facing the consequences. They better do a brilliant job with the 820 if not they are facing an uncertain future ahead.

Latest Stories

This copy is for your personal, non-commercial use only. You can order presentation-ready copies for distribution to your colleagues, clients or customers at https://www.parsintl.com/phonearena or use the Reprints & Permissions tool that appears at the bottom of each web page. Visit https://www.parsintl.com/ for samples and additional information.