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The company also gets a massive management shake-up as COO Don Morrison retires
The dark day has come: RIM has officially commenced its “cost optimization program,” which euphemistically refers to today’s termination of some 2,000 employees, or roughly 10% of RIM’s global workforce. The company’s North American employees will be notified this week, while employees in other countries will be notified at a later date.
The cuts—which have been made across all functions in the company, according to RIM—will bring the company’s workforce down to 17,000, but RIM puts a somewhat positive spin on the grim news in a statement:
“The workforce reduction is believed to be a prudent and necessary step for the long term success of the company and it follows an extended period of rapid growth within the company whereby the workforce had nearly quadrupled in the last five years alone.”
The layoffs follow the company’s dismal Q1 earnings, reported back in June. While the company reported a 16% increase in revenues over last year to $4.9 billion, revenues missed the $5.1 billion mark analysts had predicted RIM would meet this quarter. Net income for the quarter was $695 million, or $1.33 per share diluted, compared to a net income of $934 million in the previous quarter, and a net income of $769 million in the same quarter last year. RIM is predicting even lower second quarter earnings, believing revenues will land somewhere between $4.2 billion and $4.8 billion.
The stark earnings resulted in a massive dropoff in RIM’s stock. Shares plunged 14.3% in after-hours trading following the announcement, and as of 7:00 am PST, RIM shares are trading at $25.86, compared to $46.09 on April 29, 2011.
And just like how your dog bites you when you try to mend its wounded leg, RIM is lashing out. The company announced the “cost optimization program” when it reported its pitiful earnings and believes that the mass layoffs will “better position the company for future growth and profitability.”
In addition to the layoffs, RIM announced that COO Don Morrison will be retiring, which doesn’t appear to be related to the “cost optimization program.” Morrison, who joined RIM in 2000, has been on temporary medical leave since June, and his leave was (interestingly) announced the same day RIM delivered its shocking earnings report. At the time, the company said that Morrison would be returning later in the year.
The management shake-up isn’t limited to Morrison’s departure. Thorsten Heins will be filling the role of COO of Product and Sales, while Jim Rowan will take on the oddly arranged title of COO of Operations (chief operations officer…of operations). Rowan will also now oversee Organizational Development and Facilities Management functions. Patrick Spense, who has overseen RIM’s sales and country operations for the last ten years, is taking on the role of Managing Director of Global Sales and Regional Marketing. CIO Robin Bienfait will now be overseeing the Enterprise Business Unit, in addition to her CIO responsibilities.
All of these changes will allow RIM to hold on to a few tendons to keep itself functioning for another quarter or two, but can it save itself from certain annihilation? Let's stay positive. It could turn itself around in the last hour and become one of those crazy success stories that becomes the inspiration for a Sunday night made-for-TV movie.
Or...it could be like Old Yeller, and someone needs to just put the sick and dying RIM out of its misery.
Image source: southernliving.com
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