Research In Motion Ltd. has confirmed it is in the middle of implementing layoffs as part of a broader restructuring that is aimed at helping the struggling BlackBerry maker cut up to $1-billion in costs by the end of fiscal 2013.
Shares were down 52 cents or about five per cent at $10.44 in trading on the Toronto Stock Exchange on the news.
The Waterloo, Ont.-based technology giant has seen its smartphone sales drop sharply over the past year as consumers overwhelmingly opted for Apple Inc.’s iPhone and devices running Google Inc.’s Android software. After several dismal financial quarters and a management shakeup that saw Thorsten Heins promoted to CEO, RIM announced in late March that it was launching a comprehensive review.
The company is looking to trim at least 2,000 jobs from its workforce of around 16,500, sources have previously told the Globe, but the cuts could eventually go much deeper than that. RIM's sales, human resources and manufacturing divisions were apparently hit on Tuesday, while more layoff notices were being issued to others on Wednesday, according to one person familiar with the restructuring.
"They are letting people go in big waves right now," this person said. "RIM has been quiet on the numbers and the process under way largely to shield employees who have still to hear the news about themselves."
RIM has already announced the departure of several senior executives and Mr. Heins has been frank about the need to focus RIM as it makes a transition to its new BlackBerry 10 software platform. He has told the Globe previously that some parts of the large multinational company – which has offices and staff around the world, from Waterloo, Ont. to Singapore – were no longer needed. Some areas within RIM, such as the one that house-built smartphone applications (or apps) for BlackBerrys, have already seen senior managers packaged out.
Although a RIM spokesperson offered little new details in a statement on Wednesday, they confirmed that staffing levels were a part of the larger streamlining effort.
"[H]eadcount reductions are part of this initiative," the spokesperson said. "RIM has reduced some positions as part of this program and may continue to do so as the company methodically works through a review of the business."
The company declined to make available any executive who could detail what the cuts would look like, citing a quiet period ahead of financial results, and said RIM will provide a "business update" when it reports its earnings next week on June 28.
As the situation for RIM has darkened, the company said it would stop providing quantitative guidance to financial analysts. But in a business update in late May, Mr. Heins warned that RIM was likely to see an operating loss when it reports in late June.
That update came three days after the Globe first reported that massive layoffs were about to hit RIM, and in his statement Mr. Heins said that the review of "RIM’s organizational structure" would include "significant spending reductions and headcount reductions in some areas throughout the remainder of the fiscal year."