BlackBerry maker Research In Motion is cutting its workforce by about 10 percent. The job cuts follow a continuing slide in market share by the maker of the popular smartphone, and leaves the company with a global workforce of about 17,000.
Along with the layoffs, the Waterloo, Ontario-based company is changing its senior management team, with a new COO for product and sales, a new managing director for global sales and regional marketing, and a new COO for operations.
'Cost-Optimization Program'
The company said its "cost-optimization 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." It added that its workforce had quadrupled in the last five years during a period of rapid growth.
Recently, RIM predicted that its quarterly revenue could be lower, its first drop in nine years. It's steadily losing market share to Apple and Google's Android, which many industry observers have attributed to being late in upgrading its smartphone platform.
Avi Greengart, an analyst with industry research firm Current Analysis, said his main question is "what are they reacting to?" It could be a reaction to Wall Street's perception, he said. The company's stock has plummeted 52 percent in the last year.
But, Greengart noted, RIM is "still profitable," adding that "unit sales in some areas, such as Europe and parts of Asia, are up dramatically." He noted that the company's main problem is in "high-end sales, everywhere."
Since sales of some product lines are up, and the company is undergoing "a massive transition of moving to a new platform in order to compete with Google, Apple and Microsoft," Greengart questioned the cutbacks.
'Business 101'
"It's Business 101," he noted. When steady revenue is coming in and profits are up, Greengart said "cutting the people working on that transition and those profits could be suicide." He added that the executive reorganization makes sense if there was a need for a change there, but right now "RIM needs everyone working around the clock" without any adverse impact on employee morale.
"They should be investing, going for broke right now," Greengart added. It's not yet clear if RIM's emerging product line is "strong enough" to go head-to-head with Apple and Google, he said, although it's evident they were "certainly late" in matching the competition.
A key question is whether RIM, like Palm and Nokia, which also were once mobile kings, is in a downward spiral. Greengart said it's "too soon to say," but RIM is clearly enjoying "massive overseas growth," still has a strong brand, and its new PlayBook tablet recently won a Best of Show award at a major trade show in the U.K.
"I'm not saying they're done," he noted, "but the risk is there."
Source: http://us.rd.yahoo.com/dailynews/rss/personaltech/*http%3A//news.yahoo.com/s/nf/20110725/bs_nf/79496
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