BlackBerry maker Research In Motion will cut 11 per cent of its workforce as it struggles to compete with Apple and Google.
Canadian company RIM announced it will cut 2,000 jobs, its first reduction of headcount in a decade, calling the move "a prudent and necessary step" for its long-term success.
One analyst said the job cuts were slightly deeper than expected but were key to RIM's recovery from a slump triggered by product delays and intense competition from Apple's iPad and iPhone as well as devices powered by Google's Android software.
"This is not totally unexpected. I think the size of the cuts is a little bit bigger than what they were intimating before," said Jefferies & Co analyst Peter Misek.
"I think this is obviously realigning the cost structure to a new growth, or sales, reality."
RIM said one-time charges from the job cuts were not included in its outlook for the second quarter or for the full year, and it would explain the financial impact of the cuts when it reports second quarter results on September 15.
"Cost-cutting is unlikely to change the competitive position for the company" or accelerate RIM's revenue growth, BGC Partners analyst Colin Gillis said.
Job cuts would help if the company were moving downstream toward entry and mid-market phones, but in such a case even 11 per cent job cuts wouldn't be enough, he said.
If RIM was still chasing the high-end market for smartphones, it shouldn't be focused on trimming expenses, but on executing more effectively, Gillis said.
The BlackBerry maker, whose headcount will be reduced to about 17,000 people, also announced a string of changes to executive responsibilities including the retirement of chief operating officer Don Morrison.
Many senior RIM executives have recently defected, including two who left for rival Samsung Electronics in a month.
It will be important to note whether RIM would adopt its new QNX operating system on its smartphones, Misek added.
"I think the key here, more than ever, is when do their products launch and what kind of reception will they have and most importantly, when will QNX come in," he said.