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RIM Lays Off 2,000 Workers -- or Does It? [Update]

Research in Motion (RIMM) is making headlines today with its announced plans to lay off 2,000 employees.Yet the company has a puzzling way of trimming its workforce, as becomes apparent when you look a little more closely.

Maybe co-CEOs Jim Balsillie and Mike Lazaridis need some remedial math courses. RIM has disclosed its headcount in numerous recent public reports -- and none of its figures add up. No matter how many employees it cuts, the company still ends up with the same number it started with.

First go to RIM's 2011 annual report. According to the Message from the Co-CEOs, the company's "year of exceptional growth and accomplishment" (code for losing market share, being late with new product, and creating a public operational embarrassment) " is a direct reflection of the dedication and hard work of more than 17,000 employees and the strength of our business partnerships around the world."

So, we have more than 17,000 -- which would make you think that the exact number was somewhere south of 17,500. If the workforce was larger than that, presumably the company would have called it "almost 18,000" or whatever the next round number was.

Oh, wait. RIM did that in its annual information form public filing:

As of February 26, 2011, RIM had approximately 17,500 full-time employees: approximately 6,200 in the product development area; approximately 1,600 in sales and marketing; approximately 1,500 in customer care and technical support; approximately 2,300 in manufacturing and supply chain; and approximately 5,900 in administration and business professional functions, which includes information technology, BlackBerry network operations and service development, finance, legal, facilities, and corporate administration.
At least the numbers in that explanation add up. Too bad RIM can't say the same about its press release today, which announced details of its "cost optimization program":
As part of this broad effort, RIM is reducing its global workforce across all functions by approximately 2,000 employees. RIM intends to notify impacted employees in North America and certain other countries this week. The remainder of the global workforce reductions will occur at a later date subject to local laws and regulations. All impacted employees will receive severance packages and outplacement support.

The size of this workforce reduction is in line with the preliminary estimate that was factored into RIM's full year financial guidance on June 16, 2011. Following the completion of the workforce reduction, RIM's global workforce is expected to be approximately 17,000 people. Additional information about the financial impact of this workforce reduction and other operating expense reductions will be communicated when the company reports Q2 results on September 15, 2011. As explained on June 16, 2011, any one-time charges associated with the cost optimization program are not included in RIM's Q2 and full year outlook, but will be identified and disclosed on September 15, 2011.

Somehow, RIM is subtracting 2,000 from 17,500 -- or is it 17,000? -- and coming up with ... 17,000.

Everyone knew that the layoffs were coming. Only in the company's last earnings call, Balsillie and Lazaridis called the reduction "streamlining", according to the Q1 FY2012 earnings call transcript from Morningstar.

Maybe instead of worrying about what wording might make the company look best in public, Balsillie and Lazaridis might have paid a little closer attention to their New Math. Could that be why Balsillie and Lazaridis don't seem to be worried? Maybe by their count, RIM still has a leading smartphone market share.

[Update: I finally heard back from RIM via its PR agency. The company's explanation for the major discrepancy -- how it could cut 2,000 employees and still have 17,000, was that it originally did have 17,500 at the end of February. But it was adding employees between then and now, so the net is 17,000. A little quality time with old arithmetic lessons showed that RIM had to have added 1,500 jobs in a little over four months, or 8.6 percent of its headcount. All while results were tanking. No wonder it didn't want to make those details too explicit.]


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