Job Cuts at BlackBerry Maker RIM Could Reach 6,000By CIOinsight | Posted 05-31-2012
BlackBerry maker Research In Motion has said it expects "soft results" for the next few quarters, as well as an operating loss for the May quarter that analysts with Canaccord Genuity, in a May 30 report, said is "well below" their 5.4 percent operating margin estimate.
RIM's fiscal 2013 first quarter ends June 2. By June 1, the company is expected to begin a round of layoffs that could include 2,000 jobs, The Globe and Mail reported May 26.
Reuters, citing a person familiar with the matter, said the staffing reductions could affect as many as 6,000 people in RIM's legal, marketing, sales, operations and human resources divisions. According to Reuters, RIM currently has 16,500 staff members globally, compared with nearly 20,000 at its peak.
The Canaccord analysts also pointed to RIM's belt-tightening efforts. "RIM disclosed hiring two investment banks to explore strategic options and will commence significant cost reduction programs to cut $1 billion in annual operating expenses, versus Q4 2012 levels," they wrote.
The analysts were iffy on Heins' plan to move BB7 phones, as well as on the success BlackBerry 10 handsets will find when they arrive, given the tremendous competition they face.
"With increased smartphone competition from new Android and Windows smartphone launches, including the HTC One, Samsung Galaxy S III, Huawei Ascend and Nokia Lumia, RIM management expects continued soft results for the next couple of quarters, and this is consistent with our checks indicating very soft BlackBerry sales globally," states the report. It adds that by the time BlackBerry 10 launches, the market will likely also include an "LTE iPhone 5."
While RIM remains "bullish" on BlackBerry 10's prospects, the Canaccord analysts are maintaining a "cautious" outlook. They expect that, with RIM struggling to gain traction in the smartphone market, it "may eventually sell assets, sell the entire company or materially change its business model to a smaller niche supplier."
To read the original eWeek article, click here: RIM Job Cuts Could Reach 6,000, Bad News Continues for BlackBerry Maker