Patrick Spence, who quit this week as Research In Motion Ltd.’s global sales chief, was not the first senior executive to leave the struggling BlackBerry maker this spring and he will not be the last, as the company prepares for thousands of additional layoffs.
A number of senior managers have departed RIM since the January management shakeup that installed Thorsten Heins as its new chief executive officer, sources say – and what has been a steady trickle is about to speed up dramatically.
RIM, according to several people close to the company, is preparing for a major global restructuring beginning in the next couple of weeks that will see it eliminate at least 2,000 jobs across its worldwide operations. One person familiar with the company’s plans said the layoffs may cut even deeper than that. RIM has about 16,500 employees worldwide.
The measure, which would be the second downsizing in a year, will surprise no one who closely follows the smartphone industry. RIM’s sales have slipped dramatically, bringing revenues down with them. New figures from National Bank Financial and research firm IDC suggest that RIM’s BlackBerry now accounts for only 7 per cent of global smartphone shipments, as RIM continues to cede vast amounts of market share to Apple Inc.’s iPhone and handset makers running Google Inc.’s Android software.
RIM, which has stopped providing earnings guidance amid the recent competitive turmoil, now needs to slim down as it struggles to mount a comeback against rivals with huge resources.
“They’ve been axing people on the sly for months,” one former RIM executive said. “Lots of guys are being packaged out right now.”
The next round is layoffs is said to be planned for around June 1 – a day before RIM’s first quarter ends on June 2 – but some expect the announcement even earlier.
A RIM spokesperson declined to comment on “rumours and speculation,” but pointed toward comments made by Mr. Heins and RIM chief financial officer Brian Bidulka on the last quarterly earnings call. On that call in late March, the two executives said they would focus on operating metrics and efficiency with a streamlining that targets savings of about $1-billion (U.S.) by the end of fiscal 2013.
There has long been the impression among people close to RIM that radical measures have become necessary. Such a dramatic cut to the work force – which comes on top of 2,000 layoffs last summer – would reshape the company, making it leaner as it tries to push out a successful new crop of BlackBerry devices, called BlackBerry 10, on which the company has bet its future.
Under Mr. Heins’s leadership, RIM has quietly been getting rid of senior managers whose portfolios were made redundant under a new strategic direction. In a recent interview, the new CEO explained that the past few months have allowed him to fully explore the breadth of the large organization he now leads, some parts of which were less familiar to him in his former role as chief operating officer.
“It kind of allowed me to get a clearer view of what fits, and what doesn’t fit,” Mr. Heins said in late April. “Think of it like a jigsaw puzzle. I kind of figured out a few pieces that I don’t need in my puzzle to be successful.”
The recent departure of senior vice-president Alan Brenner, who was in charge of in-house software applications like BlackBerry Traffic, has cleared the way out the door for many of those who worked below him, for example. One current employee said RIM has a surplus of managers left over from the old regime of co-CEOs Mike Lazaridis and Jim Balsillie, as well as some software specialists who are not involved with the various facets of the BlackBerry 10 operating system.
It is understood that the layoffs and executive departures will sweep across departments, ranging from senior positions in RIM’s legal division to human resources, finance, sales and marketing.
Mr. Spence’s departure after 14 years at RIM marked one of the highest-profile exits of the Heins era. He had been based out of London, and was responsible for the company’s global sales strategy. He was well-liked, one person familiar with the organization said, but had some disagreements with Mr. Heins over strategy and was clearly coming under pressure as the smartphone sector in emerging markets becomes increasingly competitive for RIM.
Prior to its slump, RIM’s work force had grown to more than 20,000, partly because it made a string of acquisitions, bringing more people aboard to supplement its own technology. Some of those acquisitions provided the technology for key features that will go into BlackBerry 10.