Qualcomm has predicted a muted fourth quarter, citing declining handset sales and tough macroeconomic conditions, while laying the groundwork for job cuts in 2024.
The firm estimated Q4 revenue of $8.1 billion to $8.9 billion, with Android handset revenue expected to remain steady and its IoT and automotive revenue to decline.
Qualcomm also told investors that it expects to receive no revenues from Huawei in Q4, as it lacks a 5G license for shipping to the Chinese firm.
The predictions were made against the backdrop of its Q3 results, in which the firm’s net income dropped 52% year-on-year to $1.8 billion (£1.42 billion).
Handset chip revenue fell 25% across the period, to $5.26 billion. Business uptake of Internet of Things (IoT) devices bolstered Qualcomm’s IoT division to bring in $1.49 billion, a 24% year-on-year drop but 7% increase on Q2.
Qualcomm has engaged in an extensive cost-reduction plan and said it remains on course to exceed its goal of 5% reduction relative to the end of FY22. The company has left the door open to more extensive cuts including workforce restructuring in the coming quarter.
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“While we are in the process of developing our plans, we currently expect these actions to consist largely of workforce reductions, and in connection with any such actions we would expect to incur significant additional restructuring charges, a substantial portion of which we expect to incur in the fourth quarter of fiscal 2023,” the company wrote in a securities filing.
“We currently anticipate these additional actions to be substantially completed in the first half of fiscal 2024.”
Qualcomm has pinned its hopes for sequential revenue growth in Q4 on the seasonal performance of Qualcomm Technology Licensing (QTL), the firm’s segment that grants Qualcomm patent rights to manufacturers, and purchases by modem-only handset customers.
Though the firm’s automotive segment performed better than others in Q3, with revenue of $434 million - up 13% year-on-year, it is expected to sequentially decline across Q4 in line with seasonal trends.
“Until we see sustained signs of improving fundamentals, our operating framework does not assume an immediate recovery,” said Akash Palkhiwala, CFO at Qualcomm.
“Given our commitment to operating discipline, we will proactively implement additional cost actions in the first half of fiscal '24. This will be incremental to the reductions we have successfully completed in fiscal '23.”
In June, The San Diego Union-Tribune reported that Qualcomm had cut 415 employees from its San Diego HQ. The firm is currently estimated to have over 51,000 employees worldwide, and numbers for expected cuts have not been announced.
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