RIM Buries More Overhead Spending In Lay-Offs

Research in Motion (RIM) has been in a tight spot because of heavy criticism over governance, as well as product sales falling almost as fast as the stock price.

[Click here for the Inside Investor Relations chart]

During the last earnings call, RIM’s co-CEOs Jim Balsillie and Mike Lazaridis promised what they said would be ‘streaming’. No surprise, then, that yesterday the company announced it would lay off 2,000 employees.

The maths behind the reductions was confusing at first, however. In its annual information form, RIM mentioned that it had approximately 17,500 employees as of February 26, 2011. But in the press release yesterday, RIM announced that it would have roughly 17,000 employees left after the layoffs.

Wait a second: subtracting 2,000 from 17,500 should leave 15,500, not 17,000. Ah, but according to what a RIM spokesperson tells Inside Investor Relations, the company had been expanding ‘certain areas of the organisation’. Work the numbers and it comes to an additional 1,500 people hired in a little under five months, even as the company was under heavy fire for its poor performance.

This means the ‘cost-optimization program’ RIM announced on July 16 managed only to reduce the company to the size it was earlier this year, with no promise that an additional 2,000 people won’t return within a few months, redundant or not.

[Article by Erik Sherman, Inside Investor Relations]

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