Qualcomm Incorporated (NASDAQ: QCOM) today announced that Qualcomm Personal Electronics (QPE), a joint venture between subsidiaries of Qualcomm Incorporated and Sony Electronics Inc., has reduced its temporary workforce in response to a planned transition to new product lines, increased efficiencies through automated production methods and lowered seasonal demand.
Approximately 600 temporary workers at QPE are affected. The reduction does not affect any of the over 1,200 regular QPE employees. The temporary workers are employed by temporary employment agencies and were hired to support the unprecedented initial demand for Code Division Multiple Access (CDMA) phones due to the rapid deployment of CDMA networks worldwide. The employment agencies will assist in placing the workers in new assignments. Temporary employment levels at QPE are expected to continue to vary with seasonal demand and new product introductions. With strong customer demand indicated for new phone models, QPE expects to increase its workforce as production ramps up.
Overall manufacturing capacity at QPE will be substantially unchanged as the new CDMA phone products begin production at QPE this summer. The new lighter weight phones announced earlier this year are designed for greater manufacturing efficiency and include Qualcomm's QCP-820™, QCP-1920™ and QCP-2700™ and Sony's CM-M1300, CM-S2100 and CM-B3200.
"Our first commercial CDMA phones were designed to satisfy the initial demand for new CDMA digital cellular and PCS systems in Hong Kong, Korea and the United States," said Richard Sulpizio, president of Qualcomm Personal Electronics. "Our new phones are designed for ease of manufacturing and testing and are less labor intensive. These advancements will help QPE maintain its market leadership in the high volume production of CDMA handsets for worldwide markets."
Volume production levels and revenues at QPE are expected to decline as a result of the transition to new phone models and the effects of the industry's normal off-peak summer season. Other positive factors, including increased sales of CDMA infrastructure chipsets and subscriber chipsets, are expected to offset any effect on earnings in the third quarter of fiscal 1997.
Separate from QPE, Qualcomm is ramping up manufacturing capacity of its palm-sized "Q"™ phone and expects to hire a significant number of workers to support its anticipated production levels. Commercial launch of the "Q" phone is expected this summer, and Qualcomm is in active negotiations with several large carriers and distributors regarding purchase contracts.
Headquartered in San Diego, Qualcomm develops, manufactures, markets, licenses and operates advanced communications systems and products based on its proprietary digital wireless technologies. The Company's primary product areas are the OmniTRACS® system (a geostationary satellite-based, mobile communications system providing two-way data and position reporting services), CDMA wireless communications systems and products and, in conjunction with others, the development of the Globalstar™ low-earth-orbit (LEO) satellite communications system. Other Company products include the Eudora Pro™ electronic mail software, ASIC products, and communications equipment and systems for government and commercial customers worldwide. For more information on Qualcomm products and technologies, please visit the Company's web site at http://www.qualcomm.com.
Except for the historical information contained herein, this news release contains forward-looking statements that are subject to risks and uncertainties, including timely product development and introductions, continued growth in the CDMA subscriber population and the scale up and operations of CDMA systems, the ability to lower production costs and to successfully design and manufacture significant quantities of CDMA handsets, infrastructure and chipsets or other equipment on a timely and profitable basis, the ability to successfully complete purchase contracts for the "Q" phone, change in economic conditions of the various markets the Company serves, as well as the other risks detailed from time-to-time in the Company's SEC reports, including the report on Form 10-K for the year ended September 29, 1996 and most recent Form 10-Qs.
# # #