Research In Motion (RIM) will cut 2,000 jobs, or about 11 per cent of its global workforce, this year to reduce costs in the competitive smartphone and tablet markets, in which consumers are increasingly turning to Apple and Android products.
The BlackBerry maker provided the details on Monday, about a month after announcing it would reduce its workforce to increase profit after it had lower BlackBerry smartphone sales in recent financial quarter.
The job cuts are the largest in the Canadian technology icon’s history and come after several years of rapid global growth and expansion.
“The workforce reduction is believed to be a prudent and necessary step for the long-term success of the company,” RIM said in a statement before stock markets opened for the week.
“It follows an extended period of rapid growth within the company whereby the workforce had nearly quadrupled in the last five years alone.”
In afternoon trading on the Toronto Stock Exchange, RIM’s shares were down $1.28, or 4.8 per cent, at $25.19.
RIM, based in Waterloo, Ont., currently has about 19,000 employees across its operations.
Employees based in North America will begin to receive their notices this week, while those in most other countries will be told at a later date, the company said.
RIM is facing a host of competition in the smartphone market from Apple’s hugely successful iPhone and the emergence of smartphones using Google’s Android operating system, both of which have hurt
its share of the important U.S. market.
Its PlayBook tablet, which met expectations of selling 500,000 in the recent quarter, has received lukewarm reviews compared with Apple’s iPad.
RIM has said it will release a new generation of BlackBerrys next year with the same operating system as its PlayBook tablet, making its smartphones more like mobile computers.
“If they want to be a Top-3 or Top-5 smartphone player, then they have to much more aggressively spend money in the consumer market,” said analyst Alkesh Shah of Evercore Partners.
“They have to create a differentiated consumer message,” Shah said from New York.
There aren’t enough reasons for consumers to buy a BlackBerry smartphone or tablet over Apple or Android products, he said, suggesting RIM could promote its security feature, valued by business users, to a consumer audience.
RIM could do a better job telling consumers its PlayBook, expected in the future to run Android software applications, will not be exposed to any malware from using these apps, Shah said.
Otherwise, RIM could make more cuts and only focus on providing high-end smartphones and tablets to businesses and governments, he said.
“But they need to pick one of those two strategies and lay that out for investors.”
RIM already laid off an estimated 200 employees in Waterloo in late June, though the company declined to confirm the number.
RIM said it expects to provide more information on the latest round of layoffs when the company reports fiscal second-quarter results Sept. 15.
Northern Securities technology analyst Sameet Kanade said he expects a total of about 3,000 job cuts, noting that RIM has increased its total number of employees through a series of acquisitions in recent years.
Kanade said the job cuts will be disruptive for the company.
“It doesn’t help employee morale. It doesn’t help the expectant financial performance,” Kanade said from Toronto.
The cuts also won’t make any difference to RIM’s current market share, he added.
“I think all eyes are on next year to see what exactly happens.”
Kanade said he expects RIM’s shares to trade below $20 in another three quarters, which is where he believes it should be.
The technology company is also making changes to its executive lineup that will give more responsibilities to certain people.
Former Siemens Communications executive Thorsten Heins will take an expanded role of chief operating officer that includes all product engineering functions. His broader responsibilities come as the company announces that current COO Don Morrison plans to retire after taking a temporary medical leave last month.