BlackBerry manufacturer Research in Motion Ltd. has announced it is cutting about 11 percent of its workforce – 2,000 jobs – and expanding several senior managers’ roles to help the company fight for a bigger piece of the multi-billion dollar smartphone market against competitors like Apple and Google, Reuters reports.
RIM’s first layoffs in almost a decade, the cuts will reduce the Waterloo, Canada-based company’s numbers to 17,000 worldwide. In a statement, the company said the layoffs are a “prudent and necessary step” for its long-term success.
Once the market leader, RIM now makes the world’s third-largest mobile operating system and is losing ground to Apple’s iPhone and devices that use Google’s Android operating system. While BlackBerry is popular in Indonesia, the U.K., and the Netherlands due to pay-as-you-go plans and BlackBerry Messenger, its market share slipped from 19 percent in 2009 to 16 percent in 2010, and is expected to fall to 11 percent by the end of the year, PC Magazine reports. The company’s PlayBook tablet computer, released in April, has not sold well, according to the New York Times.
RIM’s share price is down 60 percent this year, and earlier this month, investors agreed to give its co-CEOs Mike Lazaridis and Jim Balsillie six months to improve the company’s performance. The company will launch new BlackBerry 7 devices next month and move to a new smartphone operating system called QNX over the next year.
While applauding RIM’s steps to streamlines operations, analysts questioned whether cutting costs would make the company more competitive. “One has to wonder if this is going to make its execution crisper,” Sterne Agee tech analyst Shaw Wu wrote in a note. “In addition, one never wants to see a company cut investment in a fast growing market especially when its competitors [Apple, Google and Microsoft] continue to invest aggressively.”
The markets were also less than impressed, and shares of the company slipped more than 4 percent in the first hours of trading after the announcement, according to MarketWatch.