Research in Motion will reportedly lay off 2,000 of its employees, or about 10 percent of its total workforce, according to a press release issued this morning. The move comes as part of a “workforce reduction” following the company’s rapid expansion which lead to quadruple growth in its team over the past five years.
Spoiler alert: both of RIM’s co-CEOs are safe for now as neither Mike Lazaridis nor Jim Balsillie was mentioned in today’s release. Other top management positions on the other hand, will be reorganized. Although the layoffs come as a shock to many, the news actually stems from the cost optimization program the company announced on June 16th.
The program is set on “eliminating redundancies and reallocating resources to focus on areas that offer the highest opportunity of growth”. As a necessary step in the company’s long term success, 2,000 employees will be laid off this week and receive severance packages and outplacement support. Once complete, RIM’s worldwide workforce will consist of approximately 17,000 people.
Only time will tell whether the workforce reduction was the smart play. The operating expense reductions will not be reflected until the Q2 results on September 15, 2011. We saw Wall Street’s reaction after the Q1 results where RIM shipped 500,000 PlayBooks and net revenue rose 16 percent from the year ago quarter. Can today’s move help the company turn it around?
