RIM set to axe 2,000 jobs and review management
Tuesday 26 July 2011
The beleaguered smartphone giant Research in Motion is to slash its workforce by over 10 per cent as it kicks off a company-wide cost-cutting drive.
The Canadian group first announced plans to reduce costs last month, agreeing at the same time it agreed to review its management structure. This followed disappointing sales numbers and product delays which forced the company to warn on profits.
RIM yesterday revealed 2,000 employees would be axed, bringing its global workforce to around 17,000. The company said it would inform those employees affected this week.
Carolina Milanesi, an analyst at Garter, said: "It is normal behaviour when times are tough to see where you can cut; all of the telecoms companies that have been having a difficult time have gone through this."
RIM said the job cuts was a "prudent and necessary step for the long- term success of the company", adding that the workforce had nearly quadrupled as the company expanded rapidly over the last five years alone.
Geoff Blaber, an analyst at CCS Insight, said: "RIM is having a difficult time. It is a small company that has grown extraordinarily quickly. While the cuts are slightly bigger than expected, it is not on the scale of a company like Nokia."
The Finnish group said it would cut 7,000 jobs in April as part of a move to cut its operating costs by €1bn (£882m).
RIM also announced that chief operating officer Don Morrison, who is currently on medical leave, will retire from the company after more than 10 years. The group will keep its dual chief executive roles for now, but the situation is under review.
Mr Blaber said RIM was strong in the UK, but faced pressure in North America.
"A lot of the negative sentiment is driven out of North America, but the fear is that with any more issues and its performance in other regions may begin to suffer," Mr Blaber said.
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