RIM to Cut 2,000 Jobs as BlackBerry Loses Share to IPhone

Research In Motion Ltd. (RIMM), maker of the BlackBerry smartphone, plans to cut 2,000 jobs, or about a tenth of its workforce, as sales slow amid market share losses to Apple Inc. (AAPL)’s iPhone.

The reductions, across all functions, are part of a plan to “focus on areas that offer the highest growth opportunities,” RIM said today in a statement. The job cuts will leave the Waterloo, Ontario-based company with about 17,000 employees.

RIM predicted last month that sales this quarter may drop for the first time in nine years. The company is losing market share in the U.S. to the iPhone and handsets running Google Inc. (GOOG)’s Android software, in part because it hasn’t introduced a major new BlackBerry model since August. Cheaper Google phones are also making inroads in Latin America, Asia and Europe, threatening the popularity of less expensive BlackBerry models like the Curve.

Today’s announcement “takes care of the expenses and they still need to focus on the revenue side,” said Alkesh Shah, an analyst at Evercore Partners Inc. in New York. “They need to find a way to make consumers get excited about RIM products. At this point they haven’t gotten there.”

RIM fell 85 cents, or 3.1 percent, to $27.06 at 10:26 a.m. New York time in Nasdaq Stock Market trading. The stock had dropped 52 percent this year before today.

Photographer: Adeel Halim/Bloomberg

While RIM had said on June 16 it would cut jobs, the figure of 2,000 “is more significant that previously suggested” by co-CEO Jim Balsillie, said Mike Abramsky, an analyst at RBC Capital Markets in Toronto, who rates RIM “sector perform.” Close

While RIM had said on June 16 it would cut jobs, the figure of 2,000 “is more... Read More

Close
Open
Photographer: Adeel Halim/Bloomberg

While RIM had said on June 16 it would cut jobs, the figure of 2,000 “is more significant that previously suggested” by co-CEO Jim Balsillie, said Mike Abramsky, an analyst at RBC Capital Markets in Toronto, who rates RIM “sector perform.”

Investor Scrutiny

While RIM had said on June 16 it would cut jobs, the figure of 2,000 “is more significant that previously suggested” by co-CEO Jim Balsillie, said Mike Abramsky, an analyst at RBC Capital Markets in Toronto, who rates RIM “sector perform.”

When asked about the restructuring plan by one analyst on a June 16 conference call, Balsillie had said: “I would not call it a restructuring and I think that’s just radically mischaracterizing it.”

The company said today any charges associated with the job cuts including severance packages aren’t included in its forecasts for the current quarter and fiscal year. RIM will give details on the financial implications of the job cuts when it reports fiscal second-quarter results Sept. 15.

RIM, whose management structure has come under increasing scrutiny from investors, also said it reassigned some senior managers’ responsibilities and titles.

‘Margin Pressure’

Chief Operating Officer Don Morrison, currently on medical leave, plans to retire and Jim Rowan has taken on the expanded role of COO for operations, RIM said today. The company named Thorsten Heins to the enlarged position of COO for product and sales, overseeing product engineering, hardware and software.

Photographer: Andrew Harrer/Bloomberg

The Blackberry Torch. RIM predicted last month that quarterly revenue may drop for the first time in nine years. The company is losing market. Close

The Blackberry Torch. RIM predicted last month that quarterly revenue may drop for the... Read More

Close
Open
Photographer: Andrew Harrer/Bloomberg

The Blackberry Torch. RIM predicted last month that quarterly revenue may drop for the first time in nine years. The company is losing market.

The promotion of Heins, a former Siemens AG manager who joined RIM in 2007, and a move to bring hardware and software under the leadership of one executive should accelerate product development, said Shah, who has an “equal weight” rating on RIM.

“Thorsten, with his Siemens background, is known as somebody who is exceptionally operationally efficient,” Shah said. “That’s a positive for the upcoming margin pressure that is likely.”

RIM also appointed Patrick Spence as managing director of global sales and regional marketing. Chief Information Officer Robin Bienfait will also oversee the enterprise business.

Investors including Northwest & Ethical Investments LP have pushed for broader changes at the top of the company. Northwest & Ethical last month made a proposal to split the roles of chairman and CEO to increase board oversight over co-CEOs Balsillie and Mike Lazaridis, who also share the chairman’s role.

It withdrew the proposal after RIM tried to make the case the chairman title helps the co-CEOs generate business, particularly overseas. RIM also agreed to form a committee to study its leadership and examine the importance of the chairman post.

Photographer: Daniel Acker/Bloomberg

An Apple iPhone 3G, left, and a BlackBerry Curve. The company is losing market share in the U.S. to Apple ’s iPhone and handsets running Google Inc.’s Android software. Close

An Apple iPhone 3G, left, and a BlackBerry Curve. The company is losing market share in... Read More

Close
Open
Photographer: Daniel Acker/Bloomberg

An Apple iPhone 3G, left, and a BlackBerry Curve. The company is losing market share in the U.S. to Apple ’s iPhone and handsets running Google Inc.’s Android software.

To contact the reporters on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.