As part of its restructuring efforts, Research In Motion (RIMM) is planning across-the-board...


As part of its restructuring efforts, Research In Motion (RIMM) is planning across-the-board layoffs that will cover at least 2,000 employees, sources tell The Globe and Mail. It's added RIM, which has about 16,500 employees (down from a peak of ~20K), plans to announce the news around June 1, and has been quietly conducting layoffs in advance. A source tells Reuters the job cuts could eventually total 6,000. (also)

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Comments (13)
  • redwoodsman
    , contributor
    Comments (110) | Send Message
     
    Layoffs are to be expected to cut costs and streamline the system.
    If RIMM can turn things around maybe they can rehire their people. It amazes me how RIMM bashers want to drive the company out of business and put thousands out of work. Will they be able to operate efficiently with the lower sales force waits to be seen.
    27 May 2012, 10:39 PM Reply Like
  • TomasViewPoint
    , contributor
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    Would be interesting to see what their revenue and net income per employees looks like the past 5 years.
    27 May 2012, 10:52 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3130) | Send Message
     
    Recent numbers are interesting. I suspect if they moved towards pre2010 figures they might increase profitability.

     

    Source: TD Ameritrade
    RIMM is consistently one of the most efficient companies in the Communications Equipment industry. With a Return on Assets, Revenues Per Employee, and Return on Equity of 8.75%, $1,117,273, and 12.23% respectively, they are among the most effective companies in the industry.

     

    NOK is doing an acceptable job in comparison to its peers with a Revenues Per Employee, Return on Assets, and Return on Equity of $342,721.90, (9.50%), and (19.44%) respectively. Despite above average performance at generating revenues from employees, the company is below average at managing their owner's equity and is average at managing their resources compared to other companies in the Communications Equipment industry.

     

    AAPL is consistently one of the most efficient companies in the Computer Hardware industry. With a Return on Assets, Revenues Per Employee, and Return on Equity of 31.42%, $2,356,954, and 47.10% respectively, they are among the most effective companies in the industry.

     

    So RIMM is doing better than NOK, but a long ways to meet the effectiveness of AAPL. Lay-offs can increase efficiency, but the next earnings report is likely to contain charges due to restructuring. If they can complete the process over the next two or three quarters, they might show a better return once BB10 devices hit their first full reporting quarter in 2013. Overall I think this is the type of action existing shareholders may want, though it is unlikely to gain many new investors due to perceived risk and uncertainty.
    27 May 2012, 11:34 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4911) | Send Message
     
    HH

     

    Good insight. What I was thinking about was the trajectory.

     

    If RIM can stabilize revenue and expense per employee then they appear to have a grip on their business and if they reverse the trends then that is outstanding. They may and probably never will beat Apple but if they can carve out a business for themselves that is sticky then it could be a great investment at some point.
    28 May 2012, 04:25 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4911) | Send Message
     
    I just did a quick analyis. CY 2010 which is FY 2011 appeared to be their peak revenue year. There was also a massive amount of hiring in the 2009 and 2010 timeframe and they shot up from around 10-12K employees to around 19K. They appear to be unwinding that now.

     

    My sense is that they overshot their hiring by order of magnitude just as competition was heating up and eroding their margins. A double whammy of margin impact.

     

    By my calculation their Operating Income per Employee is only around 1/3rd of its peak which means (all things being equal) they need to chop a huge amount of headcount. They are really retracing the size of their company to sometime in the middle of the last decade. At least with respect to number of employees as it relates to operating income.

     

    I am aware they are moving work to Asia to maintain their employee count and hopefully compete which is also another lever to cut costs and raise Operating Income per employee. I would also note that sales are up and SG&A is up so they are trying to drive revenue. It appears this company has a big expense issue. This is one sick puppy.

     

    I need to listen to management tell how they are going to cut costs because if they are not then they are dead.
    28 May 2012, 09:13 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3130) | Send Message
     
    A Billion of cost cutting from downsizing looks to be significant. However, it will take into mid 2013 to really see the results of that. So far they are not borrowing money, still have positive earnings per share, and still have a large cash position. All things consider, they are positioned better than Nokia, who recently had their credit rating dropped near junk level. I'm not so sure that RIMM can reach their old revenues per employee level, though they were a profitable company in 2010 with a much smaller overall user base. Quite a bit of the legacy programming group will not be needed as BB10 rolls out, and at least from the Reuters and other articles, it appears that excess management positions encumbered operations. It would not surprise me if some of the people there now actually will become more efficient without tiers of management looking over their shoulders.
    28 May 2012, 09:51 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4911) | Send Message
     
    Really they may need to reduce their employee expense by around 55% or more which means taking positions to other lower cost geographies. So they don't necessarily need to take the headcount down to old levels as they may need the hours of development but they have to cut the employee cost per hour/year.

     

    I am always suspect when I see the number of employees ramp during growth years that they were a bit out of control. It is hard to even manage that many new employees.
    28 May 2012, 10:18 PM Reply Like
  • j-dub
    , contributor
    Comments (1235) | Send Message
     
    A lot of AMERICAN based articles love to, at every opportunity, bash the CANADIAN company Research in Motion while extoling the virtues of everything and anything Apple, an AMERICAN company.
    Wonder why?
    27 May 2012, 11:37 PM Reply Like
  • klarsolo
    , contributor
    Comments (705) | Send Message
     
    What a truly pathetic comment
    28 May 2012, 02:08 AM Reply Like
  • jcard2015
    , contributor
    Comments (455) | Send Message
     
    lets remember folks , RIM is building a new platform vs the competitors. The layoffs do show that BB10 is much more efficient platform vs BB7

     

    Jc
    27 May 2012, 11:40 PM Reply Like
  • GSlusher
    , contributor
    Comments (1283) | Send Message
     
    @joeycard:

     

    Could you explain that? The layoffs have nothing to do with the efficiency of BB10 and everything to do with RIM's declining sales and revenue.
    28 May 2012, 07:13 PM Reply Like
  • bedrock65
    , contributor
    Comments (673) | Send Message
     
    Quote from RIM'S Q4 earnings

     

    "The CORE program is a company-wide initiative that we expect to drive significant improvements and efficiencies across all functions in the organization. The financial objectives for the CORE program are targeted to drive $1 billion in savings by the end of fiscal 2013 based on our current run rates."

     

    RIM told everyone about their restructuring plan but no one paid attention.
    28 May 2012, 07:35 PM Reply Like
  • GSlusher
    , contributor
    Comments (1283) | Send Message
     
    Let's hope that RIM's CEO also cuts his own pay by at least half.
    28 May 2012, 07:10 PM Reply Like
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