Qualcomm halts UMB project, sees no major job cuts

By Sinead Carew (Reuters)

Qualcomm Inc, seeking to cut costs in the face of slowing demand for cell phones, has stopped developing a next-generation wireless technology called Ultra Mobile Broadband and is making small-scale layoffs.

The wireless chip maker will instead put its resources into a rival high-speed technology called Long Term Evolution, which some of its major customers, such as Verizon Wireless, have backed, said Qualcomm Chief Executive Paul Jacobs.

Jacobs told an annual analysts’ meeting on Thursday that there are no plans to undertake “a large layoff across the company” as he expects a modest market recovery in the second half of 2009.

Qualcomm issued weaker-than-expected full-year forecasts last week, leading some investors to question how sure it could be of its outlook in the difficult economic environment.

“We’re trying to do as good a job as we can predicting the market. With that said there’s still some uncertainty out there,” Jacobs said, citing challenges in predicting phone volume sales and product mixes for 2009.

After opening the meeting by joking “Wasn’t fiscal 2008 a nice time?” Jacobs said he was still seeing growing demand for advanced cell phones, putting Qualcomm in a good position as it sells technology licenses as well as chips.

“We’re looking at difficult times in the near term, but the long term strength of the company is strong,” he said.

Qualcomm wants to increase business from existing cell phone makers such as Sony Ericsson, as well as sell chips to market leader Nokia after ending their legal battles with a technology licensing agreement.

The company is also looking for growth beyond cell phones with its Snapdragon chips, aimed at consumer electronics such as pocket computers or low-power laptops. Qualcomm expects the first devices in the first half of 2009.

As for MediaFLO, its mobile television business, Qualcomm plans to expand it beyond the United States, where it has its own network to kick-start demand for the technology. Chief Operating Officer Len Lauer said Qualcomm could look to buy airwaves in markets such as India.

The company said its estimate, given about three years ago, for spending $800 million on developing the MediaFLO USA network was outdated but it did not give spending details beyond saying that 2009 capital spending would be lower than 2008 spending for the network.