RIM Reports Loss as It Cuts Jobs, Delays BlackBerry 10
By Hugo Miller - Jun 29, 2012 5:53 AM GMT+0800
Research In Motion Ltd. (RIMM), losing ground to Apple Inc. (AAPL) and Google Inc. (GOOG), said it will delay the BlackBerry 10 phone release, cut 5,000 jobs and posted a quarterly loss that was five times bigger than projected.
The stock plunged 22 percent after the company reported a first-quarter loss of 37 cents a share, excluding some items. Analysts had estimated a 7 cent loss, according to data compiled by Bloomberg. Sales tumbled 43 percent to $2.8 billion, missing an estimate of $3.05 billion.
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RIM, which stopped giving sales and profit forecasts last quarter, has failed to keep up with the capabilities of Apple’s iPhone and Android devices, prompting customers to flee the BlackBerry platform. The company is working on an operating system with better Web and touch-screen features -- a lineup that now won’t arrive until the first quarter of next year, more than a year later than originally planned.
“The delay may just be the final nail in the coffin,� said Sameet Kanade, an analyst at Northern Securities in Toronto who has a sell rating on the stock. “This is not just a disappointing quarter, but is a big question mark about the company going forward.�
Stock Slide
RIM fell as low as $7.14 in late trading after closing at $9.13. The stock had already lost more than two-thirds of its value in the past 12 months and had fallen almost 95 percent from its stock market peak in mid-2008, cutting the business’s market value to $4.79 billion.
The job cuts will shrink the workforce by about 30 percent, cutting it from 16,500 to 11,500 by March, RIM said.
The company also reported a pretax writedown of $335 million and said it expects to report an additional operating loss in the second quarter. The first-quarter net loss was $518 million, or 99 cents a share, compared with a profit of $695 million, or $1.33, a year earlier.
RIM’s plummeting stock price has spurred investors to demand a shakeup in strategy, with some shareholders seeking a breakup or merger. Chief Executive Officer Thorsten Heins said in May that RIM had hired JPMorgan Chase & Co. (JPM) and RBC Capital Markets to help evaluate its strategic options.
At the time, RIM forecast an operating loss for the first quarter and said it was streamlining operations by reducing spending and headcount. The company is trying to save $1 billion in annual operating costs by eliminating workers and manufacturing sites.
‘Not Satisfied’
“I am not satisfied with these results and continue to work aggressively with all areas of the organization and the board to implement meaningful changes to address the challenges, including a thoughtful realignment of resources,� Heins, 54, said today in a statement. “Our top priority going forward is the successful launch of our first BlackBerry 10 device.�
Even before the latest results, some investors were pushing RIM to put itself on the block.
“We would like to see a sale of the company or a breakup, and if a breakup, the sale of each of the parts,� Vic Alboini, chairman of the Toronto-based investment firm Jaguar Financial Corp. (JFC), said last month. He sees Microsoft Corp. (MSFT) or International Business Machines Corp. as potential buyers.
“We’re pushing and cajoling RIM to get to the promised land of a sale or breakup,� he said.
One bright spot is RIM’s cash balance, Kanade said today. The company’s cash, equivalents and short- and long-term investments rose to $2.2 billion last quarter, from $2.1 billion in the previous three months.
“The only saving grace is they have cash of $2 billion, but they’ll start burning that,� he said.
Market Share
The company’s share of the global smartphone industry fell by more than half to 6.4 percent in the first quarter, according to research firm IDC. Android, an operating system developed by Google and shared with manufacturers, jumped to 59 percent, while Apple’s iOS operating system accounted for 23 percent.
U.S. BlackBerry defections remain high, RIM said today on a conference call.
“Their business is being squeezed by Apple and Android,� said Scott Sutherland, an analyst at Wedbush Securities in San Francisco who has a neutral rating on RIM.
RIM had previously said that the first of the new BlackBerry 10 phones would come out in the latter part of this year, without giving a more specific time frame. And the product was originally expected in the first quarter of 2012. Pushing the BlackBerry 10 to 2013 means it could come out months later than Apple’s iPhone 5 and products built on Microsoft Corp.’s Windows 8 platform.
RIM said it shipped 7.8 million BlackBerrys and 260,000 PlayBook tablets in its last fiscal quarter, which ended June 2. Analysts had projected 8.8 million smartphones and 280,000 tablets, according to a survey of 10 analysts. A year earlier, RIM shipped 13.2 million BlackBerrys and 500,000 PlayBooks.
“Outside of breaking apart the business and trying to maximize the value for the pieces,� Sutherland said, “it’s going to be very, very difficult for them.�
from bloomberg
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anyone using blackberrys here?