23 June 2011

BlackBerry cuts 200 jobs after market bleeding

After two days of bleeding on the stock market in the wake of its disappointing quarterly results, BlackBerry maker Research In Motion (RIM) reportedly laid off 200 employees at its headquarters in Waterloo near here.

Though RIM didn't confirm job cuts, the local media said 200 'manufacturing' employees were issued pink slips when they arrived for work at the RIM headquarters.

Of RIM's 17,500 employees worldwide, about 9,000 work at its headquarters and regional offices around its hub.

The BlackBerry maker had announced "cost-optimization programme'' May 28 after announcing its first quarterly results which saw its revenue slip to $4.9 billion from $5.6 billion in the same period a year ago.

RIM profits also shrank to $695 million from $769 million during the same period last year.

Though RIM stock recovered more than nine percent Tuesday to close at $27.74, analysts said the wireless icon is ripe for a takeover target by giants like Google and Microsoft.

They said RIM's near-term prospects don't look bright as it is way behind in updating its aging BlackBerry handsets, with Apple and Google Android devices fast grabbing its market share.

But still unrivalled for its secure encrypted email messaging system that remains the standard for corporates and governments, analysts said RIM could be a tempting proposition for Apple, Microsoft, and even Dell and Oracle.

Apple and Microsoft currently have cash piles of over $40 billion each, while the current market value of the BlackBerry company is just $14 billion.

Bloomberg News quoted Paul Taylor, chief investment officer at BMO (Bank of Montreal) Harris Private Banking in Toronto, as saying, "Given how significant the deterioration of the stock price has been, that alone will cause interest'' in RIM.

"RIM still has meaningful market share in the US and meaningful market share internationally, and RIM has an iconic brand.'' RIM's value has plunged from $83 billion in June 2008 under onslaught from Apple's iPhone and Google Android-run devices.

Tuesday's reported job cuts seemed to be RIM's desperate attempt to infuse investor confidence, according to analysts.