Things are looking grim and grimmer for Canada-based Research in Motion, who said today they’d slash 2,000 jobs to counter sales declines. “Slash” would be the correct verb, too, since 2,000 equals roughly 11% of RIM’s global workforce, reports Reuters.
The logic behind the job cuts: RIM says it’s zeroed on “eliminating redundancies and reallocating resources to focus on areas that offer the highest growth opportunities.”
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What sort of growth opportunities? Probably the company’s new Blackberry OS 7 and PlayBook tablet (as well, the Unix-like QNX operating system that powers the latter). Not that the PlayBook’s fared terribly well since it launched unspectacularly mid-April—at least one “major big box retail” source claimed in May that the tablet missed its sales targets by over 90%, and in mid-June, UK wireless carrier O2 said it was scuppering plans to carry the 7-inch tablet on its network.
Techland‘s Jared Newman surmises the reason wireless carriers haven’t picked up RIM’s tablet could be because it “lacks native e-mail and calendar apps, which could be a big turnoff to customers, and there aren’t a lot of third-party apps available right now.” Also: “Because the PlayBook’s BlackBerry Bridge feature, which lets users tether their BlackBerry phones to check e-mail, messages and calendar, undermines carriers’ ability to sell additional data plans for tablets,” something Newman says might explain why AT&T’s blocked the Bridge app—it connects Blackberry phones to the Playbook tablet—on its BlackBerry phones.
RIM’s job cut announcement this morning isn’t exactly a surprise, but analysts say the numbers of jobs eliminated is higher than expected. RIM shares fell on news of the cuts in pre-marketing trading, probably also no surprise, though analysts have framed the job cuts as crucial to a corporate rally.
“This is not totally unexpected,” Jefferies & Co analyst Peter Misek told Reuters. “I think this is obviously realigning the cost structure to a new growth, or sales, reality.”