RIM To Axe 2,000 Jobs, Amid Smartphone Dispute

Research in Motion has confirmed plans to axe 2,000 staff from its payroll. The company announced the decision on Monday, describing it as a “Cost Optimisation Program.”

“The workforce reduction is believed to be a prudent and necessary step for the long term success of the company and it follows an extended period of rapid growth within the company whereby the workforce had nearly quadrupled in the last five years alone,” said RIM.

“As part of this broad effort, RIM is reducing its global workforce across all functions by approximately 2,000 employees.”

Expected Cuts

Staff at RIM in North America and “certain other countries” should be notified this week if their services are no longer needed. RIM confirmed that other overseas staff will be notified at a later date, subject to local laws and regulations. The redundancies will reduce RIM’s total global workforce to approximately 17,000 people.

“All impacted employees will receive severance packages and outplacement support,” said the company.

RIM had warned about the redundancies in its June earnings call, so the announcement was not unexpected. The BlackBerry maker finds itself under something of a black cloud at the moment, as it struggles to maintain a grip on its core enterprise market in the face of a growing challenge from Android and Apple.

In its June earnings report, RIM revealed that its first quarter revenues were down 12 percent from the previous quarter to $4.9 billion (£3bn). Net income was also down. RIM downgraded its revenues forecasts, causing its shares to drop 60 percent from their year high.

Silver Lining

But it is not all doom and gloom. RIM seems to doing reasonably well in other areas. Its 7-inch BlackBerry PlayBook tablet shipped approximately 500,000 units in the first quarter, and the company sold approximately 13.2 million BlackBerry smartphones in the same period. In early July it also revealed that it had signed up one million new BlackBerry subscribers in less than 3 weeks.

RIM seems to be offsetting analyst concern over its ageing handset portfolio and delays in the arrival of new models, by increasing sales outside its traditional markets such as North America and Western Europe.

Looking forward, RIM is expected to introduce new smartphones based on its QNX operating system. However, these phones aren’t widely expected to reach store shelves until some time in 2012.

Meanwhile RIM has strongly disputed the recent UK smartphone findings from ComScore.

ComScore reportedly estimated OS smartphone growth in the UK from May 2010 to May 2011, but RIM has labelled its estimate as “inaccurate by a wide margin.”

“ComScore estimated that RIM had 3.591 million BlackBerry subscribers in the UK at the end of May 2011 when in fact RIM’s UK subscriber base at the end of May 2011 stood at just under 7 million subscribers,” it said.

Internal Warfare

What is not in doubt however is the criticism RIM’s management team has had to deal with recently, especially regarding market concern over RIM’s ‘two CEO’ approach.

Indeed, RIM’s two bosses had to face down a blistering attack from an unnamed but reportedly senior RIM employee, who wrote an open letter to co-CEOs Jim Balsillie and Mike Lazaridis. The letter, published on the Boy Genius Report, condemned the chaos within RIM which it said had placed it two years behind the iPhone.

The letter called on Jim Balsillie and Mike Lazaridis to lay off unproductive workers while considering stepping aside themselves. “We are in the middle of a major ‘transition’ and things have never been more chaotic,” the letter says, then lists eight suggestions for changes.

The letter also called on executives to reduce RIM’s product line and to “stop shipping incomplete products that aren’t ready for the end user.”

RIM responded to the letter by acknowledging RIM’s difficulties, but the company insisted that there is much excitement and optimism about the new products that are lined up for the coming months.