RIM plans layoffs, stocks plunge after quarterly report
Updated: Fri Jun. 17 2011 5:06:19 PM
ctvottawa.ca
Concerns over the future of Research in Motion have gone up another notch.
In the first hour of stock trading in Toronto on Friday, RIM's stock price fell nearly 20 per cent. By the end of the day, the BlackBerry maker's stock fell 21 per cent, with shares down $7.13 to $27.24.
The company reported a disappointing first quarter and forecasts a slower second quarter. While profits actually topped expectations, the company is giving a strong warning about its financial outlook.
RIM officials announced they will soon begin to lay off staff. RIM has 17,500 employees, with about 1,000 of them in Ottawa.
"The reduction of our head count is an incredibly difficult decision, and Mike [founder Mike Laziridis] and I appreciate the impact of this on our employees, their families and the community," RIM's co-CEO Jim Balsillie told analysts during a conference call on Thursday.
RIM is headquartered in Waterloo and the company's struggles will have a major ripple effect on that community. The ripple effect is expected to be felt in a smaller capacity in Ottawa where many companies do business with RIM.
"The implications are potentially dire if RIM does not regain its mojo," tech columnist Carmi Levy wrote in The Globe and Mail on Friday.
RIM's products generally have not been setting the market on fire and critics say other cheaper phones are better designed. RIM's Playbook tablet has also sold only half a million units since it was released earlier this year.
Mike Lazaridis, RIM's founder, says the operating system for the Playbook, developed by Ottawa's QNX, which is owned by RIM, will be going into smartphones and will hit the market next year.
Even users of the RIM BlackBerrry phone have expressed disappointment that the company's products have failed to lead in innovative design and seem to be trying to catch-up with Apple and Androiod products.
RIM still had sales of $4.9 billion last quarter and a profit of $695 million but the company has lowered its outlook for the year despite the fact that both smartphone and tablet markets are growing rapidly -- yet RIM continues to lose market share.
Lazaridis says RIM is into the last phase of its transition and will be a stronger company next year.
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Comments are now closed for this story
Mark
With respect to redundancies and head count, layoffs at RIM and re-focussing on catching up to competition and moreover what consumers want can only be a good thing. RIM needs to change their structure quickly. I believe they have over 300 VP’s. Seriously – that’s a problem in its own!
frank
So does this mean no NHL team for Balsillie? Too bad. Maybe he should buy an OHL team instead with all the money he's loosing.
PS. So glad I didn't buy a Blackberry.
John in Nepean
@Mark - where do you get that RIM has 300 vice presidents?
FlairCornwall
I always liked Blackberry equipment and will contiue to support and buy products from this hard working Canadian company.
with all the corporations selling products in Canada ,here is one that is nice to see from Ontario.
Go RIM !
cha cha ching$$$$$$$$$
happy safe fathers day ,black berry users
James in Vanier
Hey Frank,
Yeah you are right it only did 6.9 BILLION in sales last year. I think he may need to sell his house and live on the street. Get a Life and realize he is still going to be worth Billions for the rest of his life.
Joseph
From their hiring in the most recent years, you will notice RIM is losing its competent capacity. They are very proud of their OLD style, Blackberry, then kind of losing high quality control in both management and work forces. Hope it will not become another Nortel.
Mark
@ Frank in Nepean. Got that from a close friend who works in their Operational Development team (aka human resources). It’s crazy. They have Senior VP’s, VP’s, Senior Directors, Directors, managing Directors, Senior managers, senior advisors. I can see why they consistently miss product launch deadlines – It takes forever to get anything approved through that top heavy structure!
Michael
I had always used Blackberry's from their inception. I recently bought the new Torch and found that it was the worst phone that I have ever used and the tounch screen was a poor cousin to the iPhone. The Torch become so frustrating that after failing in attempts to take it back to Rogers, I smashed it with a hammer and bought a Vertu Constellation smartphone. Thanks RIM for going backwards.