These are dark times for the BlackBerry maker.
Research In Motion said on Wednesday that it has begun laying off employees as part of a restructuring plan aimed to save the company around $1 billion this fiscal year.
Last month, RIM CEO Thorsten Heins said that "significant layoffs" would be made this year, leading to estimates ranging from 2,000, or about 12-percent of its workforce, to 5,000, or about 30-percent. Now the BlackBerry maker reports that it has "reduced some positions as part of its program and may continue to do so as the company methodically works through a review of the business."
Naturally RIM declined to provide numbers, but the company cut 2,000 jobs, or about 11-percent of its workforce, last July, marking the biggest employee reduction in its history. As of May 2012, only 16,500 employees remained.
RIM is expected to cut around 6,000 jobs in its latest layoff spree. According to Jefferies analyst Peter Misek, the layoffs will be related to RIM's older software and manufacturing platforms. He also said that the company will need to be flexible as it releases new BlackBerry 10 phones, as currently its revenue base will not cover costs.
"They can't jeopardize the company," Misek said. "They have to give BlackBerry 10 a number of shots. If they release a BlackBerry 10 device and it's a good device, but it does OK, they'll want to pull off an even better device shortly thereafter, and if you don't have an appropriate cost structure you might wipe out your cash before you have an opportunity."
RIM shares were down 52 cents, or about 5-percent, at $10.44 in trading on the Toronto Stock Exchange on Wednesday.
The news arrives as RIM attempts to attract developers to its upcoming BlackBerry 10 operating system slated to launch later this year. The company also recently discontinued the 16 GB version of its BlackBerry PlayBook tablet, and saw one of its manufacturing partners announce its decision to stop manufacturing BlackBerry products.
"Celestica has been a high-performing manufacturing supplier for RIM and will work closely with RIM throughout the transition," Celestica said in a press release. "As discussed on the company’s first quarter results conference call on April 24, Celestica has been working with RIM as it assesses its supply chain strategy. Celestica estimates that prior to any recoveries, its restructuring charges will not exceed $35 million."
RIM is expected to provide a business update when it reports its first-quarter results on June 28.
Since RIM is a Canadian company, that would be toooooo funny. I think the Playbook was athe straw that broke the camels back. If they would of waited a little longer and released a polished product they may not be in their current situation.
RIM ended their last quarter with over $2 billion in cash. Why should they file for bankruptcy when they aren't?
Because they will burn through that in the next 6 months.
@darkavenger : Google bought Motorola mobile unit... they actually have enough patents.
Apple nearly went under, now they're #1, RIM's not going to just disappear from one day to the next, declare bankrupcy? Why, they've been raking in cash in the billions for the last decade, they still have cash on hand, they aren't in debt. They're not out of the game yet, patents and IP are worth a fortune, not to mention their business overseas is still booming, granted they've lost a lot of share in western countries, but they've got a death grip on Asian markets.
Actually what is a bad year? RIM aren't making any losses yet.
And the media - yeah.... you are right. It appears that all these writers who write about internet sites are loyal iSheep.
It is quite startling: they are reporting every kind of crap about iPhone - apps that teach you how to wipe your sass
I am not an Apple hater but it is more than apparent that almost everything is so positive about Apple in the media. I guess they are paying well. The same goes for Microsoft - regardless of how useless their products are, they get mostly positive reviews and wide coverage.
So because you will die in like 30-40-50 years. You should lie down and wait for your demise!
Last time I have checked (a few weeks ago), RIM were still making profit.
Great logic!
Gimme a large updated hardware storm 3 and playbook and im back in bed with blackberry.
Have you seen BB10? Hell anyone here thats commented on how "RIMS DEAD" and "RIP RIM", have you seen BB10? Has anyone here talking shit on the Playbook used one recently? Probably not. Most of the "haters" would probably really like the small form factor and the bridge internet, but no the blinders on their eyes won't let them look past the media bullshit.... And this stupid site is is just as bad.
If they just make it a bit more stable, less prone to reboots, i'm game.