Waterloo, Ontario-based BlackBerry maker Research In Motion (RIM) plans to cut 2,000 jobs, or roughly 11% of their global workforce, after first-quarter profits plunged 10%. Financial pressure also came from market share loss, which fell nearly 5% in three months, and declining stock prices, which were cut in half this year.
RIM shares were at $26, or down nearly 2%, on the Toronto Stock Exchange following the announcement on July 25.
North American employees will begin to receive their notices almost immediately, while employees worldwide will find out at a later date. “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,” RIM said in a statement.
This is not the first large-scale job cut for the Canadian company. At the end of June, RIM laid off over 200 people following its last earnings report. Most were in the Kitchener-Waterloo area and worked in RIM’s manufacturing division.
After the job cuts, RIM will be left with a workforce of 17,000 worldwide.
Once Canada’s High-Tech Darling
The outlook has not always been so grim for the BlackBerry maker. In late 2007, RIM was the most valuable company in Canada based on market capitalization, with a stock price of over $120. Later that year, the BlackBerry maker added another 1.65 million subscribers in its third quarter, which pushed the total subscriber base to 12 million, doubling revenue to $1.67 billion.
Trouble began in 2010, when the day after RIM announced its highly anticipated BlackBerry PlayBook, shares fell over 4%. By May 2011, just one month after the PlayBook hit stores, RIM recalled 1,000 of the devices due to faulty operating systems, and the stock price closed at an all-time low of almost $42.
Just days before the latest job cut announcement, RIM Co-CEO Jim Balsillie told shareholders that his company’s performance has been below expectations due to plans to release the new BlackBerry operating system.
RIM’s second quarter and full year outlook for 2011 do not include severance payments or other charges related to the job cuts.
Key Statistics – Smartphone Market Share by Platform in Canada (source: Canalys)
- Despite the struggles facing RIM, the BlackBerry maker remains the most popular smartphone platform for Canadians, with 38% of the market share.
- Google’s Android platform is the second most commonly used platform, with over 28% of the market.
- Apple’s iOS rounds out the top three at just over 20%.
- Nokia’s Symbian operating system powers only close to 5% of Canadian smartphones.