Research In Motion quietly cuts jobs

The troubled telecommunications company is letting employees go in small groups.

By Benzinga Jun 20, 2012 4:57PM

By Katey Stapleton, Benzinga Staff Writer


Struggling smartphone developer Research In Motion (RIMM) is dealing with yet another bout of bad news. The company is quietly cutting jobs as part of an intense restructuring to stay afloat.


The BlackBerry maker has kept the layoffs under wraps for the past several weeks, terminating about 10 employees at a time, according to The Wall Street Journal. The company cannot afford any more bad press, and certainly chose a low-key way to add to the 2,000 employees dismissed last year.


Research In Motion is whittling away at its remaining 16,500 employees in an effort to save money. Earlier this year, management stated that its goal is to save about $1 billion in operating costs over a 365-day period.


According to BusinessWeek, the restructuring process may lead to job cuts of 2,000 to 3,000 employees if RIM tries to eliminate 30% of the targeted operating expenses through labor reductions.


Headcount is not the only category where Research In Motion has been making a conscious effort to cut costs. It was revealed yesterday that management has cut orders to suppliers by 15% to 20%, with Celestica no longer supplying the company at all.


"We believe RIM's order cuts and weak Aug Q are increasingly being priced in," Jefferies analysts said in a research note. "[While] we still see downside, our conversations with investors indicate a much wider anticipation of RIM's weakness than had been held previously."


Further evidence that Research In Motion will experience a weak August quarter comes from contract electronics company Jabil Circuit's (JBL) softened outlook. Jabil, which counts Research In Motion as its largest customer in the high velocity segment, is preparing for rocky months ahead.


Jabil said Tuesday it expects earnings of 54 cents to 66 cents a share for the quarter ending Aug. 31 on revenue of between $4.1 billion and $4.35 billion. Analysts were expecting earnings of 68 cents a share on revenue of $4.37 billion to $4.39 billion. A year earlier, the company reported earnings of 62 cents a share on revenue of $4.3 billion.


Research In Motion's bad luck has spread to companies who do business with it as well. The forecast for coming months does not appear to be clearing up much, although the company has begun taking the steps to cut costs and restructure itself completely.


RIMM closed Wednesday approximately 60% down year-over-year at $10.33.



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