Qualcomm Slices Earnings Forecast Again, Will Cut 15 Percent of Workers

Qualcomm said Wednesday that it has reached an agreement with activist shareholder Jana Partners that will see the company cut $1.4 billion in costs, reshape its board and agree to consider structural changes. The move comes as Qualcomm reported revenue and earnings significantly down from a year ago and said its current quarter earnings will fall below expectations amid weakness in its chip business.

In a presentation posted ahead of its conference call, Qualcomm said that it will lay off around 15 percent of its workforce as part of the cuts. It also plans to cut $300 million in stock-related compensation. (Qualcomm had 31,000 full- and part-time workers as of its last annual report in September.)

As part of the deal with Jana, Qualcomm is adding two outside directors — Palo Alto Networks CEO Mark McLaughlin and former Fox executive Tony Vinciquerra, and will soon add a third new director, while two current board members are retiring and two others plan to step down at the end of their current term.

On the earnings front, Qualcomm posted adjusted earnings of 99 cents per share on revenue of $5.8 billion — both down significantly from a year ago. Analysts had been expecting earnings of 95 cents per share and revenue of $5.85 billion, according to Yahoo Finance.

However, Qualcomm again cut its earnings forecast for the year after having already done so twice this year. Part of that comes from new restructuring costs. Qualcomm said it expects those charges to be between $350 million and $450 million, of which $100 million to $200 million is included in its outlook for the current quarter.

In addition to the restructuring costs, Qualcomm said it is cutting its outlook for the chip side of its operations due to lower demand for high-end phones with its chips as well as weak sales in China of some of the phones that do have its processors.

“We are making fundamental changes to position Qualcomm for improved execution, financial and operating performance,” CEO Steve Mollenkopf said in a statement. “We are right-sizing our cost structure and focusing our investments around the highest return opportunities while reaffirming our intent to return significant capital to stockholders and refreshing our Board of Directors.”

The company had said in April that cost cuts could be coming.

“In addition to our ongoing expense management initiatives, we have initiated a comprehensive review of our cost structure to identify opportunities to improve operating margins while at the same time extending our technology and product leadership positions,” Mollenkopf said back in April.

However, Qualcomm has been resisting anything that could lead the company to split its chipmaking and technology licensing businesses.

Qualcomm did say it plans to reduce its technology investments outside of its core chip and licensing business, limiting investment in other areas to a few projects such as small cells, data centers and certain vertical markets in the Internet-of-things arena.

The moves come as Qualcomm is facing stepped-up competition from Chinese chipmakers at the low end of the business as well as a battle with Samsung at the high end of the market. Samsung this year decided to use its homegrown Exynos chip for the Galaxy S6 rather than Qualcomm’s Snapdragon processor, as it had in the past.

Re/code reported in April that Qualcomm is looking to regain that business next year by building its next-generation high-end chip, the Snapdragon 820, in Samsung’s factories.

With all the news, the company’s conference call, scheduled for 1:45 pm PT, should be a doozy. Re/code will have live coverage.

This article originally appeared on Recode.net.