RIM to chop 5,000 jobs, delays launch of BlackBerry 10Richard Drew
Research In Motion Ltd. has posted the most devastating earnings report in its history, announcing a half-billion dollar loss, 5,000 layoffs and yet another delay to its single-most important product line.
So bad is the news that it has become debatable whether the company that invented the smartphone will even manage to release its much-hyped new phones before it is forced to take more radical measures, such as splitting itself up or selling to a larger player.
On almost every metric, RIM's first-quarter results were far worse than analysts expected. The company posted a net loss of $518-million (U.S.), or 99 cents per share. Revenue dropped by 33 per cent from the previous quarter, to $2.8-billion. BlackBerry shipments also dropped during the same period to 7.8 million, from 13.2 million. Shares dropped as much as 17 per cent in after-hours trading on Thursday's earnings announcement, continuing a year-long freefall that reflects the shattered confidence among investors.
RIM also announced it will once again miss its launch date for the new generation of BlackBerry smartphones, dubbed BlackBerry 10. At one point, the BB10 was expected to hit the market early this year. That date was later pushed back to the fall.
On Thursday, RIM announced consumers will not see a BB10 phone until the first quarter of next year.
"I will not deliver a product to the market that is not ready to meet the needs of our customers," RIM CEO Thorsten Heins said in a call with analysts.
"There will be no compromise on this issue."
But given that RIM will likely suffer several more quarters of losses between now and next year, the company may not have the luxury of time.
"This latest delay makes it increasingly unlikely that RIM in its current form will ever be able to make BlackBerry 10 fly," independent technology analyst Carmi Levy said.
"It wouldn't surprise me if RIM as we know it morphs significantly into another form long before these new save-the-company devices are finally, belatedly released."
Mr. Heins has already made it clear that RIM is in the middle of a strategic review that could see the company split up or be sold outright.
In addition, if the company's share price continues its current trajectory, there may not be much of it left to sell by the time BB10 hits the market.
Perhaps the biggest hurdle for Research in Motion in getting BB10 out on time is the fact that it is not simply a software upgrade, in the same way Google's updated versions of the Android operating system or Apple's iOS updates are.
Instead, RIM is undertaking a complete overhaul of its software and hardware infrastructure.
Before it launched the PlayBook tablet last year, the smartphonemaker bought an operating system developer called QNX, which build industrial-grade software for nuclear power plants and automobiles, among others.
In effect, the BlackBerry10 upgrade entails integrating the QNX operating system – which currently runs on the PlayBook tablet – with all of RIM's phones, as well as making it work with the network operating centres that handle all BlackBerry data.
But that has proven to be a monumentally difficult task, in large part because both the QNX and BlackBerry software and hardware tools are very secure, making it difficult to get them to work together.
In the meantime, RIM will now see new phones from many of its rivals, including Apple, hit the market before anyone buys a BB10 device.