By Katey Stapleton, Benzinga Staff Writer
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 layoffs under wraps for the past several weeks, with the company terminating 10 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, it certainly chose a low-key way of adding to the 2,000 employees who 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 its 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 Research In Motion 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 (NYSE: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 August quarter guidance of $0.54-$0.66 and $4.10-$4.35 billion was below Jefferies' consensus of $0.68 and $4.39 billion.
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.
Shares of Research In Motion are currently trading approximately 65% down year over year at $10.11.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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