John Paczkowski

Recent Posts by John Paczkowski

BlackBerry Maker Layoffs Met With Chorus of Raspberries

Research In Motion described its decision to sack 10 percent of its workforce Monday as “a prudent and necessary step for the long term success of the company.” But few, it seems, are buying it. Certainly, the layoffs didn’t do much to change Wall Street’s view of the company. Investors pushed RIM’s shares further into the mud over the course of the day, leaving them down nearly five percent at market close.

If RIM’s layoffs addressed any of the concerns orbiting the company, the market didn’t show it. Perhaps that’s because three-quarters of the 2,000 jobs eliminated were created in the past six months. As Ironfire Capital founder Eric Jackson notes, RIM ended its fourth quarter in February with 17,500 employees. If the 2,000 layoffs the company announced Monday dropped its headcount to 17,000, then 1,500 of them were essentially new hires brought on board during the company’s precipitous decline.

Says Jackson, “In other words, that 11 percent workforce reduction is really just a 2.8 percent reduction of RIM’s pre-February workforce levels.”

Sacking 2,000 employees isn’t so much a sign of RIM coming to terms with the grim reality it faces as it is an indication of just how scattered its leadership is. These layoffs read more like the correction of a staffing error than they do a decisive move to push RIM toward a rebound. And really, they do nothing to address the long-term issues that have folks so worried about the future of the company. Cutting expenses in the face of declining revenue is a wise move, but it doesn’t make RIM’s handsets any more compelling, its strategy any more cogent or its leadership any more reliable.

As I wrote earlier this year, “RIM’s hopeless downward spiral is the result of missteps and flaws that go way beyond its inability to meet guidance. RIM has failed to innovate. It has failed to execute. It has failed to understand the consumer market, which is increasingly informing enterprise support and purchasing decisions. And its comedy-of-errors management has consistently refused to take responsibility for those failures, because it doesn’t seem to see them as a problem.”

And if you think that’s a bit too harsh, or unfair, consider this: In 2008 RIM was an $83 billion company. Its market cap as of market close Monday: $13.98 billion.

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