What the RIM layoffs are really about (in my opinion)...

So RIM has announced it is going to lay-off 2,000 employees (or about 11 per cent of its current staff). The rumour though is that the cuts could escalate to 6,000 employees.

This comes on the back of multiple senior executives leaving RIM in the past few months.

So what is really going on with RIM? In my opinion, they are getting ready for an acquisition. This is what you do when you want to be acquired.

Realistically speaking, if RIM were to be acquired, it would be for its patents, technology (perhaps) and its sales channel (ie. carrier relationships). It would not be for its staff. In fact, the employees are a detriment to an acquisition because then the acquiring company has to go through all the pain and hassle of figuring out who to let go, giving people packages, being seen as the 'bad guy' by those remaining, etc.

It's a ton of hassle and cost for the acquiring company.

The less 'human capital' RIM has the easier it is to digest when acquired. If RIM does cut 6,000 employees (this is on top of the 2,000 or so they already cut last year), RIM's staff will be around 10,000 folks (from its peak of around 20,000).

Pretty simple math, that's 10,000 people an acquiring company would not have to process out of the company.

In the case of an acquisition, those remaining 10,000 who are part of it, will probably still get cut even more. I'd imagine the acquiring company would slash another 3,000-5,000. Or if it takes a while to get acquired, RIM may do those cuts themselves down the road.

The exodus of senior executives is another key sign that an acquisition is in the works (I do not believe it's merely a changing of the guard as part of some turn-around strategy). The reason you often see this happen is pretty simple, although often counter-intuitive. After all, what harm is there in keeping executives in place until an acquisition is done, it's not like their presence inhibits such an acquisition (the acquiring company doesn't have to take said executives on board after the acquisition after all).

The simple reason though is that the last thing RIM needs right now are 'old guard' executives walking the halls spilling the beans to co-workers that the end is near or grumbling about how screwed up everything is. Things are already tough enough without such executives poisoning the spirits of the employee base.  And the one of the last things an acquiring company wants is a business full of pissed off, demoralized employees (although sometimes that can't be helped).

New executives will know to keep their mouths shut and keep executive conversations among the executives only. They will also comfort employees and exude an attitude that everything is going to work out in the end.

For the new guard they know this is a transition job and that the pay-out for them will hopefully be a place in the new acquiring company (not to mention a good salary while at RIM, the opportunity for a quick buy-out should an acquisition occur,  making industry connections and padding their resume).

Is RIM going to turn itself around? Not a chance in hell. Not with a staff of 10,000-14,000 people. And remember, the 10,000 remaining will not be people in high spirits having watched their co-workers of many years tossed to the curb.

Nope, I would be shocked beyond all imagination if RIM is planning any kind of turn-around at all.

I think their actions scream acquisition. Not to mention the rumours a couple months ago of them courting one of the big financial firms, which only makes sense if they wanted to look at the possibilities of an acquisition.

Who knows though, perhaps RIM is looking to streamline down into a niche player in the market. I just don't see that happening though.

So the sun definitely seems to be setting on RIM.

BB10 will make or break the company. If the market's don't like the new operating system... lights out.