RIM on the rim of disaster
Aug 2, 2012 / 2:12 am
There are reports that Research In Motion (TSX:RIM) will shutter its few company-owned North American retail stores and reveal details of 3,000 jobs to be cut under a previously announced restructuring plan by the BlackBerry maker.
A source familiar with RIM's retail presence said Wednesday that the company's last existing storefront in Michigan will soon shut down, as well as nine airport locations.
Meanwhile, online magazine Cantech Letter says further workforce reductions will be revealed on Aug. 13. According to the report, the cuts would be part of the 5,000 layoffs the company announced earlier this year.
The Waterloo, Ont.-based company declined to confirm Cantech's report and would only confirm that recently its Boston retail store closed.
Although retail sales of RIM products are primarily through partner companies such as telephone and cable companies as well as third-party retailers, it has had a few locations under its own banner.
"We're constantly studying the consumer market and how customers make purchases," said an emailed statement from RIM representative Nick Manning.
"Consumers still have many options to buy BlackBerry products from over 20,000 retail locations in the U.S. and online."
RIM has been making drastic reductions across its operations to help counter faltering sales of its smartphones, particularly in North America.
RIM has been working to turn around its operations after watching its market share erode as consumers switched to Apple's iPhone and other smartphones running Google's Android operating system.
The company's future success rides on the unveiling of its BlackBerry 10 operating system, which has suffered two major delays that have pushed its debut into early 2013.
In the meantime, it has pledged to investors that it will find savings wherever it can over the next several quarters, which it expects will continue to be very challenging for its business. The company has said that costs â€” particularly jobs â€” directly linked to the development of its BlackBerry 10 operating system would not be affected.
"These difficult changes are necessary as we drive a program to reduce our operating expenditure by over $1 billion," the company said.
In the quarter ended June 2, RIM saw revenue drop 33 per cent to $2.8 billion, down from $4.2 billion in the prior quarter.
Over the past few months, several notable executives have left the company, including co-CEO Jim Balsillie and others who were in sales and operations roles.
This week, Hampus Jakobsson, director of strategic alliances, became the latest to exit after he announced plans to take a job at a new startup company.
RIM has replaced some of the vacant positions and shifted other roles to current executives.
In separate developments late Wednesday, RIM countered reports that said the company had agreed to hand over encryption keys to the government in India that would allow access to secure emails and its BlackBerry messenger services.
"RIM is providing an appropriate lawful access solution that enables India's telecom operators to be legally compliant (with BlackBerrys) to the same degree as other smartphone providers in India," the company said in an emailed statement.
RIM said the access agreement does not extend to its enterprise communications, or business customers.
"RIM cannot access information encrypted through BlackBerry enterprise server as RIM is not ever in possession of the encryption keys," it said.
The company "maintains a consistent global standard for lawful access requirements that does not include special deals for specific countries."
Note to readers: This is a corrected story. A previous version late Wednesday said the Cantech report said the 3,000 job cuts were in addition to previously announced reductions rather than part of them.
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