Rogers fighting to survive with new round of layoffs
The recent job losses are part of the company’s search for eternal corporate youth.
It's generally accepted that, over time, individuals become mature adults. With the growth spurts and clumsy mistakes of early life behind them, they find a steady groove and settle down.
Corporations, however, are locked in Peter Pan mode.
For them, maturity carries the threat of stagnation and diminished market share. This condemns them to flit about, searching for new partners, technology and opportunities.
Research in Motion is one Canadian company publicly struggling with that pressure to compete against younger, fresher talent in a cut-throat market. As part of a painful, ongoing restructuring process, there has been speculation that as many as 6,000 employees could lose their jobs.
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Rogers Communications is another example. It's efforts to trim expenses has just led to layoffs of another 375 people — on top of over 300 cut in March. The consensus is that this signals the beginning of another corporate campaign for eternal youth.
Fierce competition with Bell Canada — which has already cut its payroll by about 13 per cent compared to one per cent at Rogers — has led to a dual strategy of cost-cutting and simultaneous investment in strategic upgrades and emerging technology.
The competitive advantage that Rogers used to have with its more advanced 3G network has now been eliminated by upgrades undertaken by Bell and Telus. They can now offer the same smartphones as Rogers.
On another front, Rogers' cable division is slugging it out with Bell, which has rolled out its Internet Protocol TV service in Montreal and Toronto.
The service is delivered over an Internet protocol network and allows users to watch sports, for example, while pulling up stats.
Rogers has already attempted to compete using traditional measures such as discounts on home set-top TV boxes and consumer promotions such as six months of free service. That aggressive approach has contributed significantly to bottom line pressure — without stopping market share erosion.
The pressure is on: Rogers reported a one per cent decline in revenue to $2.95 billion in the latest quarter. And it's widely expected to revise its full-year estimates downward when second quarter results are posted at the end of July.
In addition to its grassroots promotion campaign, Rogers has made sizable investments to reinvigorate growth. Among them is a $533 million payment for a joint stake with Bell Canada in Maple Leaf Sports and Entertainment, Ltd.
It's also taking steps to encourage more mobile video use, which generates higher wireless revenues.
But the biggest hope of all is pegged to The Next Big Thing: the mobile wallet.
Rogers recently announced a partnership with CIBC to store credit card information for the bank's Visas and MasterCards on Rogers' phones. The phones can then be used to make payments in stores by emitting a signal to a special receiver at checkout.
Rogers makes money by charging CIBC "rent" for space on the phones' SIM cards. In the future, it intends to offer space on its phones to other companies involved in transactions with consumers.
But it doesn't stop there.
Rogers executives say there are hundreds of millions of "cards" that could be securely stashed in smartphones. That sleek "mobile wallet" could eventually replace the bulging rectangle we all tote about, storing virtual debit cards, driver's licenses, health cards, loyalty cards, gift cards, store cards, security credentials and transit passes.
To build even further on that potential, Rogers has already applied for permission to become a credit-card issuer.
If permission is granted, Rogers could get transaction fees on payments if its own credit-card credentials are stored in a customer's mobile wallet.
Rogers' relentless fight against obsolescence is, furthermore, expected by shareholders. The expectation is that constant innovation is the norm, and there's no tolerance for stumbles — something that embattled RIM has learned.
Not that long ago, when the telecom market was deregulated and carriers like Rogers bid billions of dollars for more spectrum to carry their wireless data and signals, it seemed that the potential for growth was limitless.
But as anyone who has attempted to fight off middle-age spread and wrinkles can attest, it's an exhausting — and expensive process. And the wins become smaller with each passing year.
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