RIM to lay off 2,000 employees

The company says the move is part of a "cost optimization program" and will notify employees in North America and "certain other countries" this week.

RIM BlackBerry

Research In Motion plans to lay off 2,000 employees, the company announced today.

The layoffs are part of a "cost optimization program" for RIM, whose lineup of handsets has been coming under increasing pressure from smartphones such as the iPhone and devices running Google's Android operating system. According to the Waterloo, Ontario-based company, the program "is focused on eliminating redundancies and reallocating resources to focus on areas that offer the highest growth opportunities and alignment with RIM's strategic objectives."

Affected employees in North America and in "certain other countries" will be notified this week, RIM says. The company will speak with affected employees in other countries "at a later date." RIM will be offering employees severance packages and outplacement support.

RIM announced its plans for layoffs last month. It said that at the time that it expected the workforce reduction to start in its second fiscal quarter, ending in late August. However, it didn't expect a financial benefit until its fiscal third quarter.

Related stories:
• RIM misses on revenue, announces layoffs
• Anonymous letter bemoans RIM management woes
• RIM's BlackBerry PlayBook launching in 16 countries

The company today provided some insight into its decision to lay off 2,000 employees, saying that the workforce reduction is "a prudent and necessary step for the long-term success of the company." RIM pointed out that the layoffs come after "an extended period of rapid growth within the company whereby the workforce had nearly quadrupled in the last five years alone."

However, things haven't been going so well for RIM as of late. As the company's co-CEO Jim Balsillie said in a statement to investors last month, so far, its 2012 fiscal year has been a disappointment.

"Fiscal 2012 has gotten off to a challenging start. The slowdown we saw in the first quarter is continuing into Q2, and delays in new product introductions into the very late part of August is leading to a lower-than-expected outlook in the second quarter," Balsillie said. However, the co-CEO kept a brave face on his company's troubles, telling investors that "RIM's business is profitable and remains solid overall with growing market share in numerous markets around the world and a strong balance sheet with almost $3 billion in cash."

Even so, the company had a difficult fiscal first quarter, posting revenue of $4.9 billion, down 12 percent compared to the previous quarter and below analyst forecasts of $5.15 billion.

RIM's troubles were due mainly to tepid BlackBerry PlayBook tablet sales, which were affected by a launch that, Balsillie said, "did not go as smoothly as planned." During its last reported quarter, RIM shipped just 500,000 PlayBook units and 13.2 million BlackBerry smartphones. In comparison, Apple announced last week that during its fiscal third quarter, it sold 9.25 million iPads and 20.34 million iPhones.

The troubles at RIM have caused some investors to lose some confidence in the company's top-level management. Last month, a group of investors withdrew a proposal ahead of RIM's annual shareholder meeting that aimed at examining whether or not RIM should eliminate its dual-CEO structure with Balsillie and Mike Lazaridis at the top. Those questions were also raised by an anonymous employee last month who wrote about RIM's management troubles.

Although those investors didn't get the top-level management shakeup they've been looking for today, there has been a change at the top. RIM also announced today that its chief operating officer, Don Morrison, who has been on temporary medical leave, will retire from RIM. The company's COO for operations, Jim Rowan, and Thorsten Heins, RIM's COO for product and sales, will be taking on expanded responsibilities at the company.

Update at 5:13 a.m. PT to include background details.

 

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