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RIM Now Laying Off Employees; Shares Fall

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.