RIM Shares Rise On Layoffs, Exec Shuffle - InformationWeek

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RIM Shares Rise On Layoffs, Exec Shuffle

Investors believe changes will help stanch smartphone maker's losses for now, but longer-term challenges remain.

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Shares of Research In Motion were up 1.8% in early trading Tuesday, one day after the BlackBerry maker said it would eliminate 2,000 jobs and shake up its executive ranks.

RIM shares (RIMM:NASD) were trading at $27.16 after opening at 26.78. The shares closed at $26.67 on the previous day's session.

On Monday, the struggling smartphone vendor said it would lay off 2,000 employees worldwide and reorganize its senior management ranks in an effort to rein in costs and bolster its weakened competitive stance against rivals Apple and Google Android.

RIM will split operations responsibilities between two individuals. Thorsten Heins takes on the role of COO for products and sales and will oversee hardware and software engineering. Jim Rowan becomes COO for operations, with oversight over manufacturing, global supply chain, and repair services. Also, RIM announced that COO Don Morrison, who had been on medical leave, will retire from the company after 10 years with the organization.

CIO Robin Bienfait maintains her current responsibilities and, in an expanded role, will also lead the company's enterprise business unit. David Yach remains CTO.

The uptick in RIM's share price indicates investors' early take is that the changes will--at the very least--stanch the company's declining profits and market share. The company's net income fell 9.6% year-over-year in the most recent quarter, to $695 million, despite the mid-April launch of the BlackBerry PlayBook tablet, supposedly the company's answer to the iPad.

Longer term, some analysts believe it may be too late for RIM to close the gap with Apple and Google. "Cost cutting is unlikely to change the competitive position for the company," said BGC Partners analyst Colin Gillis, according to Reuters. RIM's share of the U.S. smartphone operating system market fell 4.2%, to 24.7%, for the three-month period ending in May, ComScore estimated. Google led the field with a share of 38.1%, while Apple was second with 26.6%.

RIM's BlackBerry was once the unchallenged leader in the smartphone market, but in the past year it's been eclipsed by Apple's iPhone and Google Android-based phones from several manufacturers, including HTC. Critics have charged that the company failed to respond to the new competitive threats and lost its technological edge. The first version of the PlayBook, for instance, required a connection to a BlackBerry smartphone for e-mail access.

RIM will reportedly introduce new BlackBerry 7 models on Tuesday.

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