This week is going from bad to worse for Research in Motion. Today brings news that the BlackBerry-maker has begun shedding 2,000 jobs, a blood-letting that's speculated to triple by the end of the summer, if not go much deeper. Shares were down 4.28 per cent, to $10.28, on news the pink slip parade has begun.
Earlier this week, the story was that RIM's most stalwart, Celestica, would no longer make or service its products; a parting of the ways that was seen as such a good thing for Celestica that its stock price actually rose.
To think it's only Wednesday. One can only imagine the news tomorrow will bring.
There's a difference though between ominous signs and grim realities. Celestica and Surface were dark clouds, today's job losses is the sweep of a storm that threatens only to grow more destructive.
RIM has so far refused to disclose how many employees will go, saying only that further details will be released towards at the end of June.
The most persistent reports peg the number at 2,000 jobs, roughly 12 per cent of its total workforce of 16,500 employees. However, a figure as high as 10,000 was floated in May.
While that number may well prove aggressive, it is confirmed that RIM seeks to slash at least $1-billion in costs by the end of next year.
Unless sales pick up considerably between now and then, those savings will surely come at the expense of jobs. So far there has been little reason for optimism. In March, the company reported that quarterly sales had dropped 20 per cent from the previous quarter.
Also reported was a loss of US$125 million, compared with a profit of $934 million the year before. As of today, its stock price now sits at $10.28, down from nearly $32 in September and well off its high of $150 four years ago.
Seeking to stem the losses, or at least find a lifeline out, RIM hired RBC Capital Markets and J.P. Morgan Securities to explore "strategic business model alternatives", which generally means a merger or sale of the company. However, new chief executive Thorsten Heins said in March that nothing so drastic was required at this moment.
For now, Heins appears prepared to cut employees and costs until the release of BlackBerry 10, a touch screen device with an overhauled operating system, that's expected to be in stores in October. If the 10 arrives on time and proves a hit, today's cuts may be the end the bad news for RIM. If it doesn't, it may be the end of news for it altogether.