RIM adjusts to new reality by slashing 2,000 jobs

Mon Jul 25, 2011 12:06pm EDT
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By Alastair Sharp

TORONTO (Reuters) - BlackBerry maker Research In Motion plans to cut about 11 percent of its workforce as it struggles to keep pace with Apple and Google in the mobile market it once dominated.

The Canadian company's shares sunk 3 percent after the Monday announcement of 2,000 job cuts, a month after RIM said would reduce headcount for the first time in almost a decade.

The company, which described the cost reduction as "a prudent and necessary step" for its long-term success, said it would inform employees who will lose their jobs this week.

The job cuts, which were slightly deeper than some had expected, raised questions about whether lower costs alone would go very far in addressing RIM's lackluster financial performance or the steady erosion of its market share.

"The problem is you can't cut your way into growth or market leadership, and while I'm sure there was fat at RIM, the core problem sits squarely with management," said Ed Snyder from Charter Equity Research.

RIM also announced changes among its top executives. It said one of its three chief operating officers, Don Morrison, would retire and the other two, Thorsten Heins and Jim Rowan, would take on additional responsibilities.

"Cost-cutting is unlikely to change the competitive position for the company" or accelerate RIM's revenue growth, BGC Partners analyst Colin Gillis said.

That said, analysts also saw lower costs as a necessary adjustment to a new reality facing RIM, once the leading force in the multi-billion dollar smartphone market.   Continued...

<p>A man holds a BlackBerry PlayBook during the Research In Motion (RIM) annual general meeting of shareholders in Waterloo July 12, 2011. REUTERS/ Mike Cassese</p>