Research in Motion is cutting its supply chain up, starting with smartphone manufacturer Celestica, which will stop RIM production completely within the next 3-6 months.
The manufacturer expects to spend around $35 million on restructuring after RIM’s departure.
RIM has been reevaluating its supply chain as sales dwindle in the competition against iOS and Android. The company, whose devices were extremely popular in corporate environments, is failing to keep up with the consumer smartphone demands that Google and Apple have both readily met. In an effort to hold on, RIM is slimming down, including this supply chain restructure and an expected operating loss for its first quarter 2012 earnings.
“The on-going competitive environment is impacting our business in the form of lower volumes and highly competitive pricing dynamics in the marketplace, and we expect our Q1 results to reflect this and likely result in an operating loss for the quarter,” said RIM CEO Thorsten Heins in a recent company update that forced the company to halt trading on its stock.
Celestica reassured customers in its announcement today that it still anticipates a revenue increase from $1.65 billion to $1.75 billion, as well as a six cents increase on its earnings per share, at $0.26. The company is now being forced out into the wild to find new customers.
Early in June, RIM’s stock fell into the single digits at $9.57 a share for the first time in nearly a decade. The company is also planning to shut down production on its 16GB PlayBook, the company’s star-crossed attempt at entering the tablet market. But there is hope on the horizon for RIM. The company is planning to launch its Blackberry 10 operating system soon, which it hopes will refresh its line of smartphones.
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