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Qualcomm, San Diego's largest for-profit, private sector employer, said today it will have a 15-percent company-wide reduction in employment, but it hasn't said how many of those cuts will be in San Diego.

The rumor mill had the company chopping about 12.8 percent of employment. At 15 percent, there would be about 4,500 jobs lost. The reason for the larger head-chopping is obvious: throughout a conference call with analysts this afternoon, chief executive Steve Mollenkopf kept repeating the Wall Street buzzwords: "maximize shareholder value," "create stockholder value," and "drive stockholder value."

The company intends to reduce total spending by $1.1 billion, and that doesn't include an annual $300 million reduction in stock-based compensation grants.

The company is adding three new faces to its board, including one that will specifically please Jana Partners, the hedge fund with a $2 billion stake in the company. Jana has been bugging Qualcomm to take measures to run up its stock.

The company's earnings are dismal, as expected. In the third quarter, sales dropped by 14 percent, net income plunged by 47 percent and earnings per share declined 44 percent. The company touted its strategic realignment plan, which may include a splitting up of the company, as Jana desires.

Wall Street was not impressed. During the regular trading day (which was weak for the overall market), Qualcomm stock dropped 1.46 percent to $64.19. In after-hours trading, the stock dropped another 1.85 percent to $63.

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Don Bauder July 23, 2015 @ 9:13 a.m.

QUALCOMM STOCK DOWN AGAIN THURSDAY A.M. WALL STREET SKEPTICAL: Stock of Qualcomm is down 4.25 percent to $61.46 shortly after 9 a.m. Thursday. Although the company bent over backwards yesterday (Wednesday, July 22) to lick Wall Street's boots, the Street doesn't seem to be pleased.

Says Tiernan Ray, columnist for Barron's, "Most of the Street seems to think Qualcomm will not go so far as splitting its business." Jana Partners, hedge fund that invested $2 billion in Qualcomm, wants the licensing business split from its chip business. The company says it is studying the matter. Best, Don Bauder


hwstar July 23, 2015 @ 9:41 a.m.

And this wall street thinking will be seen as the root cause of America's decline. The financial community has too much power. They say do it our way or we will take your company apart by proxy fights followed hostile takeover and management change.

What happened to companies coming in to existence to solve tough problems to the delight of our their customers?

The C corporation has profit as its primary objective, but really Private investment funds and C-level management are the primary benefactors in public companies today. Maybe the priorities are inverted. Maybe corporations should have customer satisfaction as their primary objective, followed by management and employees then shareholders. The profit should follow in this configuration. Maybe we should redefine what's required to be incorporated.


Don Bauder July 23, 2015 @ 11:33 a.m.

hwstar: I believe you are right. Historians studying our civilization 100 years from now will conclude that our society was brought down by greed. Wall Street has all this power because of greed: the only thing important is money.

Wall Street tells Qualcomm to slash employment, and it does so. Wall Street tells the company to split into two parts, and -- mark my words -- it will do so. Operational efficiencies aren't considered in such a decision. If the two stocks will go up, (as Wall Street believes), it will be done. (Don't be so sure a split-up will result in higher stock valuations.)

As I have said many times, greed hasn't always been so deeply inculcated in our culture. Fifty years ago, companies made such split-up decisions for a variety of reasons, mostly related to operational efficiencies. Best, Don Bauder


ImJustABill July 23, 2015 @ 10:04 a.m.

I'm not sure you can cut that many people without significantly affecting project execution. At least one analyst (Patrick Moorhead) sounds like a voice of sanity and is questioning the decisions:

"Listening to the conference call, you would think it was a company losing lots of money. Qualcomm is widely profitable and this all comes off as a response to activist investors, potentially an over-reaction. The devil are always in the details and what really matters is where they are cutting costs and laying off people. I expect that those details will roll out over the next three months. I am glad to see that datacenter, small cell and IoE were discussed as growth areas as I see them as huge opportunities. "



Don Bauder July 23, 2015 @ 11:40 a.m.

ImJustABill: Is Moorhead a securities analyst or a psychoanalyst? He sounds like the latter, and the psychoanalyst view is correct. You can see what is going on this morning: yesterday, Qualcomm didn't bow to Wall Street's demand to break the company apart. So Wall Street is bombing the stock today. Best, Don Bauder


ImJustABill July 23, 2015 @ 2:23 p.m.

I think he's a high tech industry analysis but probably more from the technical side than the financial side.


Don Bauder July 24, 2015 @ 6:56 a.m.

ImJustABill: Stock market technicians follow charts and grafs of the market's progress or lack thereof, and many apply such techniques to a single stock.

This guy's comment sounds more like he is a fundamentalist (one who follows the basics of the company's business) and not a technician. Best, Don Bauder


ImJustABill July 24, 2015 @ 7:59 a.m.

I don't mean technical from the Wall Street definition of technical (which I think is basically some hocus pocus pattern searching) I mean he looks at the science and technical and business aspects of what the company is doing. What technologies does the company have and what could they move into to make money?


Don Bauder July 24, 2015 @ 11:01 a.m.

ImJustABill: OK. He is an analyst that follows the tech sector -- not one who specializes in technical analysis. His view may be right. Best, Don Bauder


Don Bauder July 23, 2015 @ 11:52 a.m.

IF QUALCOMM IS BROKEN APART, THERE IS MORE RISK OF DAMAGE TO THE SAN DIEGO ECONOMY. Therese Poletti has an interesting story this morning (July 23) in marketwatch.com. The chip makers are consolidating, she points out. Intel is buying Altera. Avago Technologies is buying Broadcom. In March, Cypress Semiconductor completed its deal to buy Spansion.

Semiconductors are an aging, high-cost industry, she says. Bernstein Research analyst Stacy Rasgon notes that past semiconductor deals focused on acquiring a new technology. Now, the deals are all about cost synergy -- a polite way to say that heads will roll as the combined companies slash costs.

If Qualcomm splits into its chipset and royalty businesses, the chipset company might soon be an acquisition target. Not only would there be more layoffs, but the company could be moved out of San Diego. That could hurt the local economy. Best, Don Bauder


hwstar July 23, 2015 @ 1:26 p.m.

Yes. They will attempt to move Design engineering to Texas or Mississippi, or even India. Look what happened to Websense and Omnitracs recently and you see the writing on the wall. The electronics industry is under immense pressure to drive down costs from these finance guys. Hail to the almighty dollar!

By the way, if you think the Engineering job market is bad right now in San Diego, just wait until these Qualcomm layoffs hit! I was employed for 25 years as an Electronics Engineer until November of last year. The job market is awful right now, but it will get much worse before it gets better. There are very few companies hiring and if they are they want someone young who will work for $50K/yr and do 60+ hour weeks. Fortunately for me, I have investments and passive income to live off of, and am semi-retired. I won't have to work for anyone in the future unless the Republicans repeal the Affordable Care Act.

It's really sad that it has come to this. I would like to continue working in Electrical Engineering, as it is fun, and I beleive that I can still contribute much to a company even though I'm in my mid 50's. Oh well... I have my own engineering lab, and keep myself challenged with projects of my own choosing. I guess this is what freedom is after all...


Don Bauder July 23, 2015 @ 1:42 p.m.

hwstar: Very interesting. I have heard this from others. The situation is unusual. The one part of the U.S. economy that is doing well is high tech, although it's possible that it is riding a bubble. Yet engineers have to scratch for jobs, and get inadequate pay, for the reasons that we have been talking about on this blog. Best, Don Bauder


ImJustABill July 23, 2015 @ 2:36 p.m.

The semiconductor industry faces many challenges now

  1. For the last ~50 years the semiconductor industry (as well as many other industries) have benefitted from consistent scaling of transistors on integrated circuits. But Moore's law is coming to an end (or at least slowing down). Foundaries (TSMC) won't be able to keep producing smaller and smaller transistors for less and less money.

  2. New chips are more and more expensive to produce and design. The most advanced chips now cost 10's or even hundreds of millions of dollars to design, prototype, and bring to production. This pretty much shuts out startups from doing a lot of things and even limits what big companies can do.

  3. There is no apparent "next big thing" to follow PC business and smartphone business. Maybe bio-med, internet-of-things ? Maybe not. To be successful the industry needs an end product for which there is big demand for high performance, lower power, new chips. It's not clear right now where that demand is going to come from.

  4. The Chinese gov't has invested highly in Chinese semiconductor companies to compete with American and multi-national semiconductor companies.

  5. Huge smartphone companies (Apple and Samsung) are increasingly vertically integrated and will be able to produce their own chipsets.


Don Bauder July 23, 2015 @ 7:25 p.m.

ImJustABill: As I mentioned yesterday, Qualcomm customers, such as Apple, are asking Qualcomm to cut its prices. Demand is soft in several areas of semiconductors. The royalty business is going gangbusters, but softening semiconductor demand is one reason Wall Street wants the company to divide itself. Best, Don Bauder


Ponzi July 29, 2015 @ 2:58 p.m.

How about drones, robots and 3D printing?


jnojr July 23, 2015 @ 1:55 p.m.

"maximize shareholder value," "create stockholder value," and "drive stockholder value."

How are those "buzzwords"? Those are the primary duties of a publicly-traded company's executives!

No company exists to "provide jobs". They're there to make money for their owners.


ImJustABill July 23, 2015 @ 2:47 p.m.

They're buzzwords because what they omit the words "short term" before the word "value" - "short term value" is what people usually really mean when they say those words.

I would argue that a company has responsibilities to shareholders, employees, customers, and society as a whole. I don't think their sole responsibility is to shareholders.


Don Bauder July 24, 2015 @ 6:58 a.m.

ImJustABill: I agree with you 100 percent. Best, Don Bauder


Don Bauder July 23, 2015 @ 7:36 p.m.

jnojr: That is the conventional wisdom now. But it hasn't always been true. Fifty years ago, corporations realized they had responsibilities to their employees, communities, their country, vendors and others, and shareholders were just one of their constituencies.

Today's mentality is one of the reasons for the horrible distribution of income and wealth that is destroying the middle class. And the middle class, remember, is the basic market for consumer-oriented companies. Consumption is 71 percent of the economy.

I can remember when Milton Friedman championed the view that you expressed. It was out of the mainstream then. Now it is a religion among modern executives who have forgotten that Friedman also said that a strong middle class was essential to a functioning economy. Best, Don Bauder


swell July 23, 2015 @ 6:49 p.m.

I'm not sure that Wall Street approves, but I believe that the best investment is R&D. It works for Google, Apple, IBM and others. It worked for Xerox, Ford and others.

You can't expect immediate payback, quarterly returns, etc but without R&D where ya gonna go? Google and Apple have projects brewing for years before they come before the public. And some never get presented. That's the long term thinking that leads to success. These companies don't sell products, that's an illusion, they sell innovation, intellectual property.

I know Qualcomm has tried, they once were a dynamo of innovation, but I hope they have something in the works or the future looks bleak.


Don Bauder July 23, 2015 @ 7:37 p.m.

swell: No question: R&D is essential for a technical company. Qualcomm yesterday vowed to keep up its R&D. Best, Don Bauder


Twister July 23, 2015 @ 7:15 p.m.

If Oliver is serious, she or he is going to have to be more explicit to draw talent from this pool.


Don Bauder July 23, 2015 @ 7:40 p.m.

Twister: Maybe he or she wants to get the emails first, and then sort through them and ask certain people to come in and interview. Best, Don Bauder


Twister July 23, 2015 @ 9:01 p.m.

Provided she/he is not pfishing. Not even a website? Why not? It could be anybody. I guess I come from the generation that thought one should introduce oneself before requesting information from others. Maybe it's on the level; maybe it's bs.


Don Bauder July 24, 2015 @ 7 a.m.

Twister: Phishing is possible in this case. Best, Don Bauder


Twister July 23, 2015 @ 7:24 p.m.

"Americans know the price of everything but the value of nothing." --Winston Churchill


Don Bauder July 23, 2015 @ 7:41 p.m.

Twister: Were those Churchill's words? They are full of wisdom, and apparently uttered before Americans shopped at Wal-Mart. Best, Don Bauder


Twister July 23, 2015 @ 9:24 p.m.

Are they open all night? I've gotta get right down there and save, save, SAVE!

Let us pray . . .


Don Bauder July 24, 2015 @ 7:03 a.m.

Twister: As discussed many times on this blog, shoppers don't save that much at Walmart stores. That's because the company pays its employees so little that they have to go on various kinds of welfare. As taxpayers, shoppers pay for that welfare. Best, Don Bauder


danfogel July 24, 2015 @ 9:01 a.m.

don bauder Yes, you have made that claim about Walmart many times. But doesn't it also apply to ANY business that under pays it's employees? In the last couple of years during this great debate on minimum wages, I have read stories of employees on many, many other companies having to do the same thing, such as auto parts stores, fast food workers, retail workers, fulfillment center workers, restaurant employees. The list goes on and on of workers talking about needing public assistance because of the low wages and lack of hours. So while Walmart is part of the problem, they are far from the only company contributing to the issue. And as far as the taxpayer footing the bill, yes we do. But there is no "Walmart employee welfare tax". My taxes are the same regardless of where I shop. and so are yours.


Don Bauder July 24, 2015 @ 3:24 p.m.

danfogel: Yes, other companies also pay extremely low wages, and block their employees' ability to get part-time jobs in addition to their regular jobs.

It all adds up to a good argument for the minimum wage, in my view. Best, Don Bauder


Don Bauder July 24, 2015 @ 7:09 a.m.

Twister: I looked up that trenchant comment. I think it is best to credit Oscar Wilde with it. Best, Don Bauder


Twister July 24, 2015 @ 9:26 a.m.

THANK you! I'd much prefer to credit Wilde than that, that, ENGLISHMAN!

As Wilde once said of fox hunters, ". . . the unspeakable in pursuit of the uneatable."

A beautiful 25-year-old recently turned me on to Wilde's "De Profundis" as the one read that changed her life. How and why I never read it, or, for that matter, ALL of Wilde's work after reading "The Picture of Dorian Grey," is an indictment of my intellect. "Out of the mouths of babes." (Who said that?)


Don Bauder July 24, 2015 @ 3:28 p.m.

Twister: Or The Importance of Being Earnest -- also delightful Wilde. Best, Don Bauder


Twister July 24, 2015 @ 9:31 a.m.

The devil's in the details. That's the short-term and the long-term of it.


Don Bauder July 24, 2015 @ 3:32 p.m.

Twister: Don't go long or short until you have checked those diabolical details. Best, Don Bauder


Twister July 23, 2015 @ 9:19 p.m.

I claim that he said it. If he didn't, somebody should have.

Here's a true story:

At a Chataqua party at the Algonquin Hotel, Sir James Agate waddled up to a group that included John Mason Brown. "Tell me Brown," said Agate, "how is it that you Americans, delightful individually, taken collectively, add up to a bunch of twerps?"

"Tell me Agate," said Brown, "how is it that with you British, the converse is the case?"


Twister July 24, 2015 @ 10:18 a.m.

Realizing your scholarly instincts far surpass mine, I decided to "Google" a string from my own story (which I gleaned from memory--often faulty--from an Atlantic story, from, I believe, the '60's) and came up with this version: http://thetrad.blogspot.com/2010/11/are-we-going-to-wear-it-or-is-it-going.html

I'd like to get to the bottom, and to know the facts, but hey, oft I find the embellished, the distilled, the incorrect, the adulterated story to have more of a ring of truth than the original.

Perhaps you can tell me the origin of the phrases:

"It's a helluva lot easier to find a million suckers with a buck than one sucker with a million." (I long attributed it to Barnum, but now cite it as "Author unknown.")

"You don't take percentages to the bank; you take MONEY to the bank."

Best, Twister

PS: I have been known to mess up quotes and aphorisms, but always attribute the the author as the source of the essence (e.g., Josh Billings' "The worst kinda ignerance ain't s' much not knowin' as 'tis knowin' s' much that ain't so.") And variations . . .


Don Bauder July 26, 2015 @ 6:47 a.m.

Twister: Both are percipient comments, but I don't know who uttered them first. Best, Don Bauder


Twister July 23, 2015 @ 9:11 p.m.

I built my business up with my own, earned money, period. I did not do it for money; the money just came because "the market" wanted what I had to sell. Period. No games.


Don Bauder July 24, 2015 @ 7:11 a.m.

Twister: Yes, but if you didn't want money, why did you go into business? Best, Don Bauder


Twister July 24, 2015 @ 9:15 a.m.

It's not that I didn't want money; it's that I put the work first instead of the money. I would like to have "made" more, but I got enough. Get the distinction?


Don Bauder July 24, 2015 @ 3:37 p.m.

Twister: Yes, I get it. In fact, it is my philosophy, too. Best, Don Bauder


Twister July 24, 2015 @ 9:46 p.m.

Yes, Don, but you're a mensch. You deserve every penny you've got. A regular Village Smithy of a man. (I had to recite that in Mrs. Henderson's elocution class.


Don Bauder July 26, 2015 @ 6:52 a.m.

Twister: The village smithy has bulging muscles. I don't qualify. Best, Don Bauder


Twister July 23, 2015 @ 9:33 p.m.

Don Bauder July 23, 2015 @ 7:36 p.m.

And the middle class, remember, is the basic market for consumer-oriented companies.

. . .

. . . Friedman also said that a strong middle class was essential to a functioning economy. Best, Don Bauder

The consumer is the Golden Goose. Once it's strangled, no more eggs for the 1 percent's basket.

That there is my twisted view anyhow.


Don Bauder July 24, 2015 @ 7:12 a.m.

Twister: That's not a twisted view. That's truth. Best, Don Bauder


Twister July 24, 2015 @ 9:43 a.m.

Even Henry Ford realized that he could screw his employees even more if he gave them a raise . . .


Don Bauder July 24, 2015 @ 3:39 p.m.

Twister: You mean because, with more money in their pockets, they would buy Ford autos? That was his reason for the generous pay he gave employees. Best, Don Bauder


Twister July 24, 2015 @ 9:48 p.m.

Yep. I think it was five dollars a day if I remember (my history) correctly.

Best, Twister


Don Bauder July 25, 2015 @ 6:13 a.m.

Twister: Yes, it was $5 a day -- a princely sum then. Later, Ford had a bitter battle with the autoworkers labor union. Best, Don Bauder


Don Bauder July 24, 2015 @ 3:45 p.m.

QUALCOMM STOCK NOT PLUMMETING. Stock of Qualcomm was up part of the day (July 24) while the market was down. Qualcomm ended the regular trading day down 0.23 percent, much less than the overall market's 1 percent decline. In after-hours trading, the stock was up 0.49 percent to $61.73. Maybe it is fishing for a temporary bottom. Best, Don Bauder


Twister July 25, 2015 @ 7:22 p.m.

Don Bauder July 25, 2015 @ 6:13 a.m.

Twister: Yes, it was $5 a day -- a princely sum then. Later, Ford had a bitter battle with the autoworkers labor union. Best, Don Bauder

Here's another take on the subject:


What's your take on this take?

According to http://www.usinflationcalculator.com/ $5 per day would be about $120 today. That would seem to reinforce the argument against Ford's employees being able to a-Ford.


Don Bauder July 25, 2015 @ 7:40 p.m.

Twister: We have discussed it on this blog: paying your employees well, and treating them decently, does indeed lead to less turnover, less theft, etc.

Five dollars a day in those days, adjusted for inflation, would not make one rich today. But five bucks a day then was a helluva lot more than other workers were making back then. Best, Don Bauder


Twister July 28, 2015 @ 6:29 p.m.

Se la va sans dire. But how much money does one need to live today? What will $2,400 a month get you? What do you do to compensate? Stick up a liquor store? Grab purses? Work three jobs? Cut the throat of some well-dressed cat that looks loaded, but is just a guy with a better job who would be on the streets without you if he got "laid" off?

Just how do we expect the homeless to compensate? Are they getting what they "deserve?" We are not our brothers' and sisters' keepers (by choice), but we run a pretty good chance of being caught in the blowback.


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