Research In Motion Softens the Blow; Cuts Jobs in Chunks

Struggling smartphone developer Research In Motion RIMM is dealing with yet another bout of bad news. The company has started to cut jobs under the radar as part of intense restructuring the BlackBerry maker must undergo to stay afloat. Research In Motion was able to keep the lay-offs under wraps for the past several weeks, with the company terminating ten employees from certain departments at a time, according to The Wall Street Journal. At a time when the telecommunications company cannot afford any bad press, they certainly chose a low-key way of adding to the already 2,000 employees that were dismissed last year. Research In Motion is whittling away at its remaining 16,500 employees in an effort to save money. Earlier this year, management stated that their goal is to save about $1 billion in operating costs over a 365 day period. According to Business Week, the restructuring process may lead to job cuts of 2,000 to 3,000 employees, that is if RIM tries to eliminate 30% of the targeted operating expenses through labor reductions. Employees are not the only category where Research In Motion has been making a conscious effort to lessen costs. It was revealed yesterday that management has cut orders to suppliers by 15-20%, with Celestica no longer supplying the company at all. "We believe RIM's order cuts and weak Aug Q are increasingly being priced in. [While] we still see downside, our conversations with investors indicate a much wider anticipation of RIM's weakness than had been held previously," Jefferies stated. Further proving Research In Motion will experience a weak August quarter is Jabil's JBL softened outlook. With Jabil relying on Research In Motion as its largest customer in the High Velocity segment, the electronic manufacturer has had to prepare for rocky months ahead. Jabil's Aug Q guidance of $0.54-$0.66/$4.10-$4.35B was below Jefferies consensus of $0.68/$4.39B. Research In Motion's bad luck has continued to plague not only itself, but those who do business with it as well. The forecast for coming months does not appear to be clearing up much, however, the wireless solutions company has begun taking the steps it needs to in an effort to cut costs and restructure itself completely. RIMM is currently trading approximately 60% down year-over-year at $10.74.