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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: DaveMG who wrote (21952)	1/26/1999 10:31:00 AM
From: CDMQ	Read Replies (3) \| Respond to of 152472

Qualcomm fends off job-cut rumors By Mike Drummond STAFF WRITER January 26, 1999 Qualcomm fended off rumors that it is poised to ax jobs, while Swedish rival Ericsson said yesterday it will slash more than a tenth of its massive 101,000-employee work force over the next two years to trim costs by $338 million. The cuts are larger than those Ericsson first announced last month and will come primarily from that company's fixed-line operations. The layoffs anticipate a weak annual earnings report due Thursday and are not seen as related to competition from Qualcomm in the wireless space. The move comes amid unconfirmed reports yesterday that San Diego-based Qualcomm is preparing to eliminate as many as 700 full-time positions perhaps as early as March 1 or sooner. That would be the largest layoff of permanent employees in that company's history. Qualcomm employs about 11,500 workers -- about as many as Ericsson is scheduled to terminate. "All (Qualcomm) employees know about this," said Volpe Brown Whelan analyst Pete Peterson. Last year the local wireless phone maker cut 700 temporary jobs in San Diego. Some analysts predict that Qualcomm probably will trim employees from the company's ailing infrastructure division in preparation for a sale or joint venture. The division makes base or relay stations that keep mobile phones connected to central-communication grids. "No one wants to touch anything that smells bad," said SG Cowen & Co. analyst Wojtek Uzdelewicz. "One way or another, they need to restructure that business." He estimated that the division will make, at best, $450 million this year. The company acknowledges the division will have to make at least $800 million to break even. Still others believe that Qualcomm will cling to its infrastructure division despite poor financial performance if for no other reason than it advances deployment of Qualcomm's brand of telecommunications technology known as code division multiple access. "I would be surprised if they closed down the infrastructure division," said Marc Cabi, analyst with Credit Suisse First Boston. "But then again, this company has a way of surprising Wall Street one way or another." Qualcomm stock closed down 87-1/2 cents yesterday to $58.12-1/2, while Ericsson closed up 56-1/4 cents to $24.37-1/2. Qualcomm declined to comment about possible job cuts. "We're not in a position to speculate about those rumors," said a Qualcomm spokeswoman, who also declined to reveal how many workers are employed within the division. Irwin Jacobs, Qualcomm's chief executive, did his part to fuel speculation last week when he said the company's flagship phone handset division could be for sale "if the price is right." Such a move would mark a startling departure for a company noted for its phones. The company is rolling out new product and the handset division has been invigorated with higher profit margins. Yesterday Qualcomm unveiled its new Thin Phone, weighing just four ounces and capable of paging, e-mail and sending and receiving data. Moreover, company officials recently boasted that the handset division finally achieved 20 percent profit margins. The company eventually hopes they will reach 25 percent. Uzdelewicz argued that selling the handset division -- while conceding that it would "take a lot of guts" -- makes sense given that competitors such as Ericsson, Nokia and South Korean manufacturers are capable of cranking out more phones at lower per-unit costs.